PH seeks to expand insurance coverage for the poor
MANILA, Philippines – Looking for ways to help the poor in the face of climate change, the Philippines has taken a leading role in the promotion of innovative forms of insurance specifically designed for those who need it most.
"We have always believed that giving financial services to the poor is one of the best ways to end poverty. It gives them the wherewithal to protect themselves from disasters and let them become more useful participants in the economy," said Department of Finance (DOF) Undersecretary Gil Beltran.
"The Philippines is frequently hit by natural calamities which reduces our GDP by about 1% every year," Beltran explained, "and micro-insurance is one of the best ways to bring about inclusive growth."
These micro-insurance policies are designed to be affordable, with premiums capped at 7.5% of minimum daily wage and coverage paying up to 1,000 times the minimum daily wage.
Because the target market is the poor who need immediate relief, micro-insurance policies also pay out fast – within 10 days of the submission of documents.
"In the Philippines, that micro-insurance coverage has grown from covering 3 million to around 31 million in such a short time is a big phenomenon," said Beltran, although he noted that premiums for micro-insurance are only around 5% of the total insurance market.
From 2012 to 2014, micro-insurance in the Philippines has seen an average annual growth of 18.4% in terms of people covered, the highest among member-countries of the Asia-Pacific Economic Cooperation (APEC).
"With the help of all our stakeholders, over a period of say 10 years, we can cover almost all of the population," Beltran said.
The DOF undersecretary was speaking at the inaugural Mutual Exchange Forum on Inclusive Insurance (MEFIN), a public-private dialogue which brought together insurance regulators from the Philippines, Indonesia, Mongolia, Nepal, Pakistan, and Vietnam from July 11 to 13 in Manila.
The dialogue, part of the APEC Cebu Action Plan, aimed to push for strategies to boost micro-insurance.
Organized with the support of German government development arm GIZ, the first meeting was led by the Philippines' insurance commissioner, Emmanuel Dooc, who was elected as the MEFIN network's first chairman.
"The Philippines is one of the champions of micro-insurance because it was one of the first countries to come out with a clear definition of micro-insurance and innovative distribution channels," said Antonis Malagardis, program director for GIZ's regulatory framework for promotion of pro-poor insurance.
One key innovation, he pointed out, was to allow anyone to sell micro-insurance as long as they are licensed. This has made micro-insurance policies more accessible, with the bulk of policies being sold in pawnshops and sari-sari stores found all over the country, instead of in offices or banks.
Another idea on the horizon is the ability to sell insurance through mobile phones. The idea isn't that popular yet, but that could change with a few more administrative regulations, said Malagardis.
For his part, Insurance Commissioner Dooc said that Typhoon Yolanda (Haiyan) played a major role in driving awareness of the benefits of insurance.
He shared that following Yolanda, about 400,000 families in the affected provinces in Eastern Visayas received insurance benefits.
"Experience, as they say, is the best teacher... In one particular village, those who didn't buy insurance learned a bitter lesson because they found out that the neighbors who bought micro-insurance for P10 to P25 managed to receive benefits of P5,000 to P10,000 immediately," Dooc recalled.
"This amount, though meager, is much, much more than the bag of groceries which most of the families who didn't have insurance cover received. So after that, it became a priority for most families as they don't want to repeat the same experience of asking for doleouts," he added.
Support from Duterte admin
"So far, I think the new administration will be supportive of some of the legislative initiatives that the Insurance Commission (IC) wants to pursue," Dooc said.
One initiative that would also help the poor is disaster pool insurance, which will bring together all licensed non-life insurance firms to make earthquake, flood, and typhoon insurance mandatory.
The draft executive order making disaster pool insurance mandatory was endorsed by the previous administration, but former president Benigno Aquino III was unable to sign it before his term ended.
Dooc said he is "hopeful" President Rodrigo Duterte will review the order, adding that he was "given an encouraging reply by the DOF."
Another initiative the IC is pushing for is tax reform for non-life insurance products. As Dooc explained, non-life insurance is currently subject to 12% VAT while life insurance is taxed at only 5%.
"If we succeed in doing that, it will promote the growth of the non-life insurance industry," he said. – Rappler.com