Insurance coverage still a low priority among Pinoys

By Jerry Maglunog

Microinsurance aims to provide insurance to people in the lower echelons of society.

It is a largely undeveloped market, however, as in the Philippines, it is estimated that not more than 10 percent of the country’s population are insured, moreso with the marginalized members of society.

Majority of the 5 percent (roughly 5 million persons) covered are those considered well-off, as they can afford the services of blue-chip insurance firms.

The rest, or about 95 million of the country’s 100 million people, rely on small firms that provide insurance coverage.

“People are either afraid or miffed by the agents who sometimes sound like threatening their clients when offering the product. But most of the time, the lack of money for premiums is always the deterrent,” Finance Undersecretary Gil Beltran said.

Beltran said the weak insurance penetration in the country should prompt Congress to establish a so-called National Strategy for Microinsurance, which was implemented by an inter-agency committee led by the Department of Finance (DOF).

This, he said, will encourage private financial institutions to develop market-based and relevant products, services, linkages, and business models to the low-income sector.

In the country, private financial institutions are actively engaged in providing various types of microinsurance products and services.

Microinsurance does not only enhance the country’s resiliency to disasters, shocks and crises, he added.

“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,” Beltran said.

Beltran said boosting microinsurance coverage rates is an effective anti-poverty measure. When this move is pushed, the national government can even abandon the controversial conditional cash-transfer program (CCT), which is viewed by many as a way to buy votes.

“We minimize vulnerabilities of the poor and enable them to rebuild the pieces of their dreams that crack when disaster hits,” he added.

While microinsurance products are provided by licensed insurance companies, and cooperative insurance societies and mutual benefit associations (MBAs), they are marketed through pawnshops, cooperatives, rural banks, mutual benefit associations, NGOs and other microfinance providers.

The unique context of microinsurance in the Philippines casts a wider net for financial inclusion, with more avenues opening greater access to finance for more vulnerable Filipinos.

Moving forward, the National Strategy for Microinsurance is now on track to establish a modern retail payments system, credit information system and collateral registry.

Since the launch of the program, there has now been more than 50 licensed insurance entities, such as banks, cooperatives and microfinance NGOs, that provide microinsurance products; 89 Insurance Commission (IC)-approved microinsurance products; and 28 million Filipinos covered.

Developments in disaster-risk insurance, microhealth products and agricultural risk insurance are also being made to further increase the penetration rate in the country.

The IC 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. The IC, a DOF-attached agency, regulates insurance firms that operate in the Philippines.

According to George Mina, president of insurance firms that operate in the Philippines, there is a need for a combination of culture change and improved economic conditions to solve the severe lack of insurance coverage in the country.

Mina said this is the reason why the IC decided to let other entities not just the universal and commercial banks (UKBs) to sell insurance plans to the public.

The official said the strategy of allowing even pawnshops and remittance centers to sell micro-insurance to the public is a good strategy to let the kind of service to have bigger penetration level in the country.