Only 7.8-M Pinoys have microinsurance
MANILA, Philippines - Despite millions of Filipinos living below the poverty line, only 7.8 million Filipinos have access to microinsurance services in the Philippines.
In a report titled Assessment of Microinsurance as Emerging Microfinance Service for the Poor: The Case of the Philippines, the Asian Development Bank (ADB) said on April 10, that the poor in the country still lack access to microinsurance products.
The ADB cited government data that claimed there were 23.1 million Filipinos living below the poverty line in 2009. This represents some 26.5% of the country's population and covers 3.86 million families nationwide.
"There has also been increased awareness and interest in microinsurance among key stakeholders. However, there is still room for growth, considering that at present only about 7.8 million are insured (including dependents) with a microinsurance policy. This falls short of the potential demand from the low-income sector based on the latest poverty statistics indicating that as of 2009 about 23.1 million people were living below the poverty line," ADB said.
The ADB said it is important for the poor to access microinsurance products because they are the most vulnerable to risk such as illness, physical injury, accident, death, and loss of property.
Poor Filipinos, particularly those in remote rural areas, lack of access to protection services is evident as the poorest Filipinos consist of fisherfolks and farmers. The ADB cited government data that showed that the poverty incidence among fisherfolk is at 41.4% while for farmers, it was at 35.7% in 2009.
"When these situations happen, the gains resulting from continued access to savings and credit services are usually eroded. In most cases, the poor are not financially prepared to cope with the risks since they have inadequate or, at worst, have no access to risk protection services. Thus, the need to provide for the future and unexpected needs of the poor was recognized," ADB said.
Microinsurance for all
To increase the number of poor Filipinos that have access to microinsurance products, the ADB urged the government to encourage microinsurance providers to focus on low-income groups.
ADB said there are 5 things the government needs to do to address the challenges in microinsurance. These are:
- Addressing remaining regulatory challenges and building the capacity of the Insurance Commission
- Developing innovative microinsurance products that address multiple risks
- Harnessing public–private sector partnerships in microinsurance
- Creating climate change-linked microinsurance products
- Educating clients on microinsurance
"There is a strong need to build an insurance culture among the poor. Educating the low-income market to overcome their bias against insurance is a major challenge. There is a need for implementation of a comprehensive financial education program that teaches clients to become proactive money managers," ADB said. - Rappler.com