Metro Manila (CNN Philippines) — The Department of Finance (DoF) says that the Philippines leads its Asia-Pacific Economic Cooperation (APEC) forum peers in terms of microinsurance.
Citing figures from Microinsurance Network Chairman Michael McCord, the DoF said that microinsurance coverage in the Philippines rose from 20% in 2014 to 28.1% in 2014, reaching an annual growth rate of 18.4% in terms of the number go person covered. Approximately 28 million people are covered by micro insurance plans as of 2015.
Compared to traditional insurance, microinsurance provides financial protection specifically for low-income individuals, through low premiums, contributions and fees. The agency says that the amount of such payments, when computed on a daily basis, does not exceed 7.5% of the current daily minimum wage for non-agricultural workers in Metro Manila.
Microinsurance products are provided by licensed insurance companies, cooperative insurance societies and mutual benefit associations (MBAs). However, they are marketed through pawnshops, cooperatives, rural banks, and non-governmental organizations, to name a few.
“There is an increased awareness and concern from the government and the private sector in working together for financial inclusion. Hence we see various initiatives on microinsurance that reflect a whole-of-government approach with extensive collaboration with the private sector,” said Insurance Commissioner Emmanuel Dooc in a statement.
Undersecretary Gil Beltran of the DoF’s policy development and management services group credits the growth to the agency’s National Strategy for Microinsurance (NSM), which has been in place since 2009.
\Among other things, the plan establishes a policy and regulatory environment for microinsurance and institutionalizes financial literacy education for the underprivileged.
“Microinsurance does not only enhance our resiliency to disasters, shocks, and crises. I actually think it is a key element to strengthening the economy and making growth sustainable. It is always a win for the economy when the most vulnerable are protected and empowered. In a way, boosting microinsurance coverage rates is an effective anti-poverty measure: we minimize vulnerabilities of the poor and enable them to rebuild the pieces of their dreams that crack when disaster hits,” Beltran explained.
In the wake of Typhoon Yolanda (internationally known as Haiyan), the DoF said that microinsurance providers were able to infuse about $11 million in typhoon-affected areas after paying out damage claims within the required 10-day period. The agency added the 129,786 families too out microinsurance policies after the typhoon.
Since the launch of the NSM, the DoF recorded more than 50 licensed insurance entities and 89 government-approved microinsurance products.
The Insurance Commission notes that there are 23 micro mutual benefit associations, 18 life insurance companies, 24 nonlife insurance companies, 42 rural/cooperative bank agents and around 100 microinsurance agents engaged in the provision of microinsurance products.
“Financial inclusion works on the simple principle that the bigger the chunk of the population you draw in and protect, the bigger your chances of economic success. When the most vulnerable wins, we all win,” said Finance Secretary Cesar Purisima in a speech.
