New microinsurance guidelines set to protect rural bank clients


The new set of guidelines issued earlier by the Insurance Commission (IC) to implement the Alternative Dispute Resolution for Microinsurance (ADReM) framework is expected to benefit microinsurance clients, including rural bank customers, in terms of fast tracking insurance claims-related disputes.

ADReM provides options to resolve disputes outside the courtroom and to minimize the expense and delays of litigation. This is very important for customers of rural banks who usually belong in the poor sector and cannot afford to endure a long litigation process for their claims to be processed.

The Bangko Sentral ng Pilipinas (BSP) has permitted rural banks to act as agents of microinsurance products under BSP Circular 683, series of 2010. This authority allows rural banks to serve as channel partners on microinsurance, facilitate client’s enrollment and collect premiums and claims administration.

Being from the same community as their target market, rural banks are in a better position to address the specific needs of the rural communities when it comes to their insurance needs compared to bigger banks and other microinsurance agents.

With more than 2,700 branches and other banking offices and more than six million clients and another 10 million household members, the rural banking industry is one of the best distribution points for microinsurance in the country.

The guidelines for the Implementation of ADReM will require all insurance entities, agents and brokers who are engaged in the microinsurance business to follow mediation-conciliation processes of claims dispute based on parameters offset under the banner, least cost, accessible, practical, effective and timely.

To implement the resolution procedures, the IC will accredit a pool of mediator-conciliators from which the parties in dispute can select. The conflict will then be settled through a graduation of levels, beginning at community-level mediation prior to reaching the IC level, if necessary.

The ADReM Framework is an output of a public-private collaboration through a working group that includes the Rural Bankers Association of the Philippines, the Department of Finance-National Credit Council, life and non-life insurance associations, Chamber of Mutual Benefit Associations, Microfinance Council of the Philippines, Society of Independent Insurance Intermediaries of the Philippines, Life Underwriters Association of the Philippines and MicroEnsure Insurance Brokers Philippines.

The Deutsche Gesellschaft fur Internationale Zusammenarbeit has been providing technical assistance and funding.

As of end of last year, there were 12.9 million Filipinos who own microlife and nonlife insurance policies, as against six million policyholders in 2010. The growth can be partly attributed to rural banks gaining stronger support from the government, which encourages private entities to offer insurance products that cater to the needs and limited financial capabilities of the poor, especially to those who had no previous access to microinsurance.


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