Micro Insurance Compilation

POWERINGINNOVATIONSIN MICROFINANCE

conference on microfinanceJuly 24 - 25, 2008 * Asian Development Bank, Manila, Philippines

CONCURRENT WORKSHOP SESSIONSCONCURRENT WORKSHOP SESSIONSCONCURRENT WORKSHOP SESSIONSCONCURRENT WORKSHOP SESSIONSCONCURRENT WORKSHOP SESSIONSThursday, July 24, 2008

1:30 p.m. - 3:00 p.m.1:30 p.m. - 3:00 p.m.1:30 p.m. - 3:00 p.m.1:30 p.m. - 3:00 p.m.1:30 p.m. - 3:00 p.m.

Poor households, including most microfinance clients, are barely able to meet a balanced budget. Without any substantialwealth, they are just managing their daily cash flows. Lacking of any financial safety net, the poor are very vulnerable tofinancial impact of fortuitous events such as death, sickness, disease, disability and natural or man-made disasters.

Facilitator:Joseph Alaban, RIMANSI Organization for Asiaand the Pacific, Inc.

Camilo Casals, Canadian CooperativeAssociation Business Development Advisor forRIMANSI

Vener Abellera, Operations Manager, CARD MBA

Documenter:Laila Garcia, RIMANSI Organization for Asiaand the Pacific, Inc.

Microinsurance: Service to the Most Vulnerable Sector of the Society

Microinsurance refers to insurance systems that offer products designed for the poor. Characteristics include simpleproduct design, frequent and affordable premium payments, and uniform benefit packages. It aims to provide access toprotection against events that affect the poor’s health and economic well-being. Typical products include life, memorial,health and property insurance, and investment instruments.

Resource speakers:

Auditorium Zone C

Poor households, including most microfinance clients, are barely able to meet a balanced budget. Without any substantialwealth, they are just managing their daily cash flows. Lacking of any financial safety net, the poor are very vulnerable tofinancial impact of fortuitous events such as death, sickness, disease, disability and natural or man-made disasters.

Facilitator:Joseph Alaban, RIMANSI Organization for Asia and thePacific, Inc.

Areli Vega, General Manager,ASKI MBA

Josie Ric Bantug, Synergy &Membership Campaign Head, RBT MBA

Microinsurance refers to insurance systems that offer products designed for the poor. Characteristics include simpleproduct design, frequent and affordable premium payments, and uniform benefit packages. It aims to provide access toprotection against events that affect the poor’s health and economic well-being. Typical products include life, memorial,health and property insurance, and investment instruments.

Resource speakers:

Documenter:Laila Garcia, RIMANSI Organization for Asia and thePacific , Inc.

Microinsurance: Service to the Most Vulnerable Sector of the Society (continuing session)

Auditorium Zone C

3:30 p.m. - 5:00 p.m.3:30 p.m. - 5:00 p.m.3:30 p.m. - 5:00 p.m.3:30 p.m. - 5:00 p.m.3:30 p.m. - 5:00 p.m.

For Evaluation Only.Copyright (c) by Foxit Software Company, 2004 - 2007Edited by Foxit PDF Editor

Expanding Access of the Poor to Risk Protection through Expanding Access of the Poor to Risk Protection through MicroMicro--insuranceinsurance

Expanding of the Poor to Risk Protection through MicroExpanding of the Poor to Risk Protection through Micro--insurance Accessinsurance Access

•• Working definition of microWorking definition of micro--insuranceinsurance

•• The opportunity: the enterprising poor are willing and able to pThe opportunity: the enterprising poor are willing and able to participate in articipate in micromicro--insurance programs. They also need risk protection.insurance programs. They also need risk protection.

•• The business advantage: existing channels to the poor that can bThe business advantage: existing channels to the poor that can beeharnessed for low cost transactions, risk management and educatharnessed for low cost transactions, risk management and educationion

•• MicroMicro--insurance as a strategic option: opportunity + institutionalinsurance as a strategic option: opportunity + institutionalstrengthsstrengths

•• MicroMicro--insurance optionsinsurance options

•• Making the strategy happen: mobilization, capacity building and Making the strategy happen: mobilization, capacity building and creating a favorable policy environmentcreating a favorable policy environment

•• RIMANSI as business development support providerRIMANSI as business development support provider

Expanding Access of the Poor to Risk Protection through MicroExpanding Access of the Poor to Risk Protection through Micro--insuranceinsurance

1. Definition1. Definition

MicroMicro--insurance is a financial product/service that the poor need and insurance is a financial product/service that the poor need and are willing are willing and able to pay for so that they are able to manage their risks and able to pay for so that they are able to manage their risks better.better.

IMC 9-2006:

The term “micro-insurance” shall refer to the insurance business activity of providing specific insurance products that meet the needs of the disadvantaged for risk protection and relief against distress ormisfortune.

Measurement challenges: Measurement challenges:

who is poorwho is poorneed, willingness and ability to payneed, willingness and ability to payrisk = the probable loss arising from a financially derisk = the probable loss arising from a financially de--stabilizing or catastrophic stabilizing or catastrophic

event event


IMC 9-2006:

A “micro-insurance product” is an insurance policy whereby:

The amount of premium computed on a daily basis does not exceed ten percent (10%) of the current daily minimum wage rate for non-agriculturalworkers in Metro Manila; and

The maximum amount of life insurance coverage is not more than fivehundred (500) times the daily minimum wage rate for non-agriculturalworkers in Metro Manila.


Implications of the definition:Implications of the definition:

simple product design that clearly identifies the face amount, bsimple product design that clearly identifies the face amount, benefits enefits and terms of the insurance uniformly applied to the clients;and terms of the insurance uniformly applied to the clients;

low amount of premium/contribution;low amount of premium/contribution;

policy contract is easily understood by the client/member;policy contract is easily understood by the client/member;

straightforward and uncomplicated documentation requirements;straightforward and uncomplicated documentation requirements;

frequent collection of premium/contribution that coincides with frequent collection of premium/contribution that coincides with the the cashcash--flow of the insured;flow of the insured;

fast and timely payment of insurance claimsfast and timely payment of insurance claims


Why microWhy micro--insurance?insurance?

Poor households, including most microfinance clients, are barelyPoor households, including most microfinance clients, are barelyable to balance financial flows, i.e., cash inflows and outflowsable to balance financial flows, i.e., cash inflows and outflows

Unpredictable catastrophic events (e.g., death, sickness, diseasUnpredictable catastrophic events (e.g., death, sickness, disease e and disability in the family, natural and man made disasters) ofand disability in the family, natural and man made disasters) often ten push poor families over the edge of financial viabilitypush poor families over the edge of financial viability

Serious social, political and moral consequences result from Serious social, political and moral consequences result from financial crises (loss of business, malnutrition, school drop oufinancial crises (loss of business, malnutrition, school drop out, civil t, civil unrest, entry into the underworld of crime, drug addiction and unrest, entry into the underworld of crime, drug addiction and sexual sexual exploitation)exploitation)

Children and women are the most vulnerable to these consequencesChildren and women are the most vulnerable to these consequences

MicroMicro--insurance: Issues, Challenges and Policy Reforms insurance: Issues, Challenges and Policy Reforms ((LlantoLlanto, , AlmarioAlmario and and GamboaGamboa).).

Typology of Informal Workers

U rb a n

W a g e E a rn e r

S e lf E m p lo y e d

R u ra l

I U rb a n M ic ro -E n tre p re n e u rs

I I I S m a ll F a rm e rs

F is h e rs R u ra l M ic ro -

E n tre p re n e u rs

IV L a n d le s s

R u ra l W o rk e rs &

F is h w o rk e rs

II U rb a n

W o rk e rs

Risks faced by the poor/informal Risks faced by the poor/informal sectorsector

Given the location and nature of their work, there Given the location and nature of their work, there are various workare various work--related risks, which have a related risks, which have a direct bearing on their social protection needs.direct bearing on their social protection needs.Common risks include poor work facilities, Common risks include poor work facilities, unsanitary and cluttered surroundings, sudden unsanitary and cluttered surroundings, sudden changes in season or climate, calamities, pest changes in season or climate, calamities, pest infestations, chemical poisoning, and infestations, chemical poisoning, and environmental risks. environmental risks.

Predictable risks pertain to risks Predictable risks pertain to risks associated with life cycle events such as associated with life cycle events such as pregnancy, birth, retirement or old age. pregnancy, birth, retirement or old age. Also known as lifeAlso known as life--cycle needs, these cycle needs, these erode the financial net worth of erode the financial net worth of households. In contrast, unpredictable households. In contrast, unpredictable risks are associated with illness, injury, risks are associated with illness, injury, death of a family member, natural and death of a family member, natural and manman--made calamities, and theft. made calamities, and theft.

Idiosyncratic (individual) risksIdiosyncratic (individual) risksCovariate risksCovariate risks-- affect a large number of affect a large number of households, which can be entire households, which can be entire communities or regions within a country or communities or regions within a country or countries. Examples: health epidemics, countries. Examples: health epidemics, environmental calamitiesenvironmental calamities

Impact on the poorImpact on the poor

The more unpredictable the risk, the more The more unpredictable the risk, the more havoc it wreaks on the economic situation havoc it wreaks on the economic situation of a poor household. of a poor household. Thus, the poor are less likely to take Thus, the poor are less likely to take advantage of growth opportunities when advantage of growth opportunities when exposed to greater risks and uncertainty. exposed to greater risks and uncertainty.

Due to increased risks and decreased ability to Due to increased risks and decreased ability to manage risks, many poor and nearmanage risks, many poor and near--poor poor households express anxiety about their households express anxiety about their perceived perceived ““vulnerabilityvulnerability””..The degree of vulnerability depends on the The degree of vulnerability depends on the

characteristics of the risk, the householdcharacteristics of the risk, the household’’s ability s ability to respond to risk (which, in turn, depends on the to respond to risk (which, in turn, depends on the householdhousehold’’s asset base), and time horizon.s asset base), and time horizon.

The most at riskThe most at riskWithin the informal sector, women and children Within the informal sector, women and children are the most disadvantaged, hence, face greater are the most disadvantaged, hence, face greater risks. risks. Women, comprising 35% of the informal sector, Women, comprising 35% of the informal sector, work for lesser paid hours than men and at the work for lesser paid hours than men and at the same time work longer hours in unpaid work same time work longer hours in unpaid work (household chores). (household chores). Children are subjected to long working hours Children are subjected to long working hours (sometimes unpaid) and exposed to unhealthy (sometimes unpaid) and exposed to unhealthy environment and workplace hazards.environment and workplace hazards.

Coping mechanismsCoping mechanisms

Traditional attitude of fatalism Traditional attitude of fatalism Indigenous social protection schemes, e.g. Indigenous social protection schemes, e.g. paluwaganpaluwaganInstitutional insurance schemes, e.g., Institutional insurance schemes, e.g., those organized by the statethose organized by the state–– GSIS, SSS, GSIS, SSS, and by commercial insurersand by commercial insurersMicroMicro--insurance schemes insurance schemes

Demand for microDemand for micro--insuranceinsurance

In general, the level of wealth, the In general, the level of wealth, the probability of the occurrence of risk, the probability of the occurrence of risk, the severity of loss due to the occurrence of severity of loss due to the occurrence of risk, and the insurance premium determine risk, and the insurance premium determine the demand for insurance of an individual the demand for insurance of an individual

However, in the case of the economically However, in the case of the economically disadvantaged segment in our society, disadvantaged segment in our society, other demand factors other demand factors –– perhaps more perhaps more compelling than the determinants outlined compelling than the determinants outlined above above –– come into play.come into play.

Other demand factorsOther demand factors

Understanding what insurance isUnderstanding what insurance isTrusting the insurerTrusting the insurerAffordabilityAffordabilityAvailability of other risk management Availability of other risk management options, e.g., savings, creditoptions, e.g., savings, credit

Commercial insurance and the Commercial insurance and the poorpoor

The price of insurance that is affordable to The price of insurance that is affordable to the poor is less than the cost at which the poor is less than the cost at which commercial insurers are willing to supply commercial insurers are willing to supply insurance. Hence, demand may be insurance. Hence, demand may be substantially lower than anticipated. substantially lower than anticipated.

How can we help the poor integrate risk management into their fiHow can we help the poor integrate risk management into their financial nancial management options and practices?management options and practices?

+ Micro+ Micro--insurance servicesinsurance services

+ Financial literacy+ Financial literacy

+ Education+ Education

+ Financial intermediation+ Financial intermediation



differentiatorsopportunity

Strategic options

The business case for MFIThe business case for MFI’’s to facilitate the provision of more formal s to facilitate the provision of more formal insurance services to the poorinsurance services to the poor


The opportunity: The opportunity:

the enterprising poor are willing and able to participate in micthe enterprising poor are willing and able to participate in microro--insurance programsinsurance programs

Market research in the Philippines (March, 2005 to April, 2008)Market research in the Philippines (March, 2005 to April, 2008)

•• Northern Luzon, 2005Northern Luzon, 2005•• Northern Mindanao Northern Mindanao –– 2005, 2006, 20072005, 2006, 2007•• Southern Luzon Southern Luzon –– 2006, 20082006, 2008•• Metro Manila Metro Manila -- 20052005•• Central Visayas Central Visayas –– 20062006•• Cambodia Cambodia –– 20062006•• Vietnam Vietnam –– 20072007•• Indonesia Indonesia –– 20082008


General Findings:General Findings:

+ microfinance clients practice risk protection through informal+ microfinance clients practice risk protection through informalmeans. Both group and individual measures.means. Both group and individual measures.

+ microfinance clients can be made to understand the concept of+ microfinance clients can be made to understand the concept offormal microformal micro--insurance insurance

+ general willingness to contribute esp. if managed by MFI+ general willingness to contribute esp. if managed by MFIpartnerspartners

+ 70% to 90% definite about participating in possible micro+ 70% to 90% definite about participating in possible micro--insurance program insurance program


The business advantage: The business advantage:

existing channels to the poor that can be harnessed for low costexisting channels to the poor that can be harnessed for low costtransactions and educationtransactions and education

Existing microfinance distribution channels Existing microfinance distribution channels maymay translate intotranslate intomore efficient micromore efficient micro--insurance operations. Overheads of 15% insurance operations. Overheads of 15% to 20% possibleto 20% possible


The business advantage: The business advantage: existing channels to the poor that can be harnessed for low costexisting channels to the poor that can be harnessed for low costtransactions and educationtransactions and education

Regular interaction with clients Regular interaction with clients maymay translate into:translate into:

+ Better knowledge of demand patterns+ Better knowledge of demand patterns+ Better design of insurance products+ Better design of insurance products+ Better control of collection and claims+ Better control of collection and claims


Better ability to get around the barriers to entry:Better ability to get around the barriers to entry:

Premium collection Premium collection

Fraud Fraud

Moral hazard Moral hazard

Adverse selection Adverse selection

CoCo--Variant Risks Variant Risks

OpportunitiesOpportunities

an an ““invisible sectorinvisible sector”” to the to the insurance industryinsurance industry

Business DifferentiatorsBusiness Differentiators

client responsivenessclient responsivenessefficient communication, efficient communication, control and service distribution control and service distribution channelchannel

MicroMicro--insurance as a strategic business option:insurance as a strategic business option:

opportunity + institutional strengthsopportunity + institutional strengths



MicroMicro--insurance optionsinsurance options

+ informal and in+ informal and in--house schemeshouse schemes+ partners agent relationships with + partners agent relationships with

commercial insurerscommercial insurers+ mutual benefit associations+ mutual benefit associations

Options: InOptions: In--house microhouse micro--insuranceinsurance

PlusPlus

Lower costs passed on to Lower costs passed on to membersmembersMay be the only choice of May be the only choice of membersmembers

MinusMinus

Small scaleSmall scaleFund management riskFund management riskRegulatory riskRegulatory risk


Options: MFI as agentOptions: MFI as agent

PlusPlus

Commissions earnedCommissions earnedMuch simplerMuch simplerLess riskLess risk

MinusMinus

Client perceptions re: Client perceptions re: commissionscommissionsPotential conflict of interest in Potential conflict of interest in claims settlementclaims settlementPerformance riskPerformance riskLess responsive than other Less responsive than other approachesapproaches


Options: Mutual Benefit AssociationsOptions: Mutual Benefit Associations

PlusPlus

Customized productsCustomized productsResponsiveness to membersResponsiveness to membersGood leverage of synergies Good leverage of synergies with MFIwith MFI

MinusMinus

Business riskBusiness riskInsurance riskInsurance riskPerformance riskPerformance risk


Mutual Benefit Associations as MicroMutual Benefit Associations as Micro--insurance Providersinsurance Providers

How are mutual associations recognized in the How are mutual associations recognized in the Philippines?Philippines?

The insurance code under Sec 391 recognizes a mutual The insurance code under Sec 391 recognizes a mutual benefit association as benefit association as “…“… any society, association or any society, association or corporation without capital stock, formed or organized corporation without capital stock, formed or organized not for profit but mainly for the purpose of paying sick not for profit but mainly for the purpose of paying sick benefits to members, or furnishing financial support to benefits to members, or furnishing financial support to members while out of employment, or of paying to members while out of employment, or of paying to relatives of deceased members relatives of deceased members ……....””


Making the MBA option happen:Making the MBA option happen:

1.1. MobilizationMobilization2.2. Operational effectiveness and efficiencyOperational effectiveness and efficiency3.3. Policy AdvocacyPolicy Advocacy


1. Making it happen: Mobilization1. Making it happen: Mobilization

Needs assessmentNeeds assessmentInterim staffingInterim staffingMarket researchMarket researchActuarial analysisActuarial analysisBusiness planningBusiness planningOperations trainingOperations trainingSystems installationSystems installationPMES/MESPMES/MESMBA Coordinator selection and trainingMBA Coordinator selection and trainingBoard election and trainingBoard election and trainingCompletion of registration processCompletion of registration process


2. Making it happen: Achieve sustainability through effective an2. Making it happen: Achieve sustainability through effective and d efficient performance in key result areas:efficient performance in key result areas:

PromotionsPromotionsCollection of PremiumsCollection of PremiumsClaims Processing and PaymentClaims Processing and PaymentRecord of financial transactionsRecord of financial transactionsRecord of insurance events (MIS)Record of insurance events (MIS)Fund managementFund managementGovernanceGovernanceManagementManagementAuditAuditProduct and Market DevelopmentProduct and Market DevelopmentMember/Client SatisfactionMember/Client Satisfaction


3. Making the it happen: Influencing the policy environment3. Making the it happen: Influencing the policy environment

+ set performance standards for the sector+ set performance standards for the sector

+ generate awareness and compliance with sector standards+ generate awareness and compliance with sector standards

+ provide policy incentives and support for good performance + provide policy incentives and support for good performance

+ ensure a level playing field for MBAs+ ensure a level playing field for MBAs

Regulating Mutual Benefit Associations and Insurance CooperativeRegulating Mutual Benefit Associations and Insurance Cooperativess

Insurance Commission issued IMC 9Insurance Commission issued IMC 9--2006, October 25, 2006 2006, October 25, 2006

•• refers to the insurance business activity of providing specific refers to the insurance business activity of providing specific insurance insurance products that meet the needs of the disadvantaged for risk proteproducts that meet the needs of the disadvantaged for risk protection and ction and relief against distress or misfortunerelief against distress or misfortune

•• premium computed on a daily basis does not exceed ten percent (1premium computed on a daily basis does not exceed ten percent (10%) of the 0%) of the current daily minimum wage rate for noncurrent daily minimum wage rate for non--agricultural workers in Metro Manila agricultural workers in Metro Manila (P313.00(P313.00--P350.00 from DOLE website);P350.00 from DOLE website); andand

•• maximum amount of life insurance coverage is not more than five maximum amount of life insurance coverage is not more than five hundred (500) hundred (500) times the daily minimum wage rate for nontimes the daily minimum wage rate for non--agricultural workers in Metro Manila.agricultural workers in Metro Manila.

•• Initial guaranty fund: P5,000,000.00 (US$ 116,280)Initial guaranty fund: P5,000,000.00 (US$ 116,280)•• Every year thereafter, all microEvery year thereafter, all micro--insurance MBAinsurance MBA’’s must increase their Guaranty s must increase their Guaranty

Fund by an amount equivalent to five percent (5%) of their grossFund by an amount equivalent to five percent (5%) of their gross premium premium collections until the Guaranty Fund shall reach twelve and a halcollections until the Guaranty Fund shall reach twelve and a half percent (12.5%) of f percent (12.5%) of the required capital for domestic life insurance companies.the required capital for domestic life insurance companies.


RIMANSI as business development support providerRIMANSI as business development support provider

Value Added:Value Added:

Catalyst to facilitate and support efforts of MFIs/MBAs to proviCatalyst to facilitate and support efforts of MFIs/MBAs to provide de better access by the poor to microbetter access by the poor to micro--insurance products and insurance products and servicesservices

Mechanism for risk pooling and cost sharing Mechanism for risk pooling and cost sharing

Forum for performance based monitoring and evaluationForum for performance based monitoring and evaluation

Advocate for policy reformAdvocate for policy reform

PHILIPPINESPHILIPPINES

- 5 with MBA partnership

- 6 licensed MBA partners

- 4 in the pipeline



Mission StatementMission Statement

We are a resource center than develops and offers riskWe are a resource center than develops and offers riskmanagement solutions to mutual benefit associations in order tomanagement solutions to mutual benefit associations in order tostrengthen their capacity to provide risk protection services onstrengthen their capacity to provide risk protection services on a a sustainable basis.sustainable basis.



Business ObjectivesBusiness Objectives

1. Assist the partner1. Assist the partner--MFIs establish their own MBAs.MFIs establish their own MBAs.2. Design and formulate appropriate micro insurance products fo2. Design and formulate appropriate micro insurance products for ther the

poor.poor.3. Formulate and promote Performance Standards aligned with 3. Formulate and promote Performance Standards aligned with

international best practices.international best practices.4. Promote mutual assistance and sharing of resources,4. Promote mutual assistance and sharing of resources,

technology and information among stakeholder.technology and information among stakeholder.5. Build the financial infrastructure for micro5. Build the financial infrastructure for micro--insurance throughinsurance through

research, education and policy advocacy.research, education and policy advocacy.



ServicesServices

Package 1: Package 1: Market research Market research Where applicable, conversion of inWhere applicable, conversion of in--house insurance programs into formal house insurance programs into formal and professionally run MBAs.and professionally run MBAs.business planning.business planning.Registration with the SEC and Insurance Commission (IC) and obtaRegistration with the SEC and Insurance Commission (IC) and obtain license in license to operate from I.C.to operate from I.C.Conduct of actuarial study.Conduct of actuarial study.Installation of simple MISInstallation of simple MISAssist newly established MBAs during initial two (2) months.Assist newly established MBAs during initial two (2) months.



Service Package 2Service Package 2

strategic business planningstrategic business planningnew product development (life insurance variants, nonnew product development (life insurance variants, non--life, health, life, health, education, savings features)education, savings features)performance monitoring and independent auditperformance monitoring and independent auditimprovement of product featuresimprovement of product featuresmember satisfaction surveys and service improvementmember satisfaction surveys and service improvement



Service Package 2Service Package 2

upgrade of MIS and accounting systemsupgrade of MIS and accounting systemsmonitoring adequacy of actuarial reservesmonitoring adequacy of actuarial reservesmanagement trainingmanagement trainingasset/liability managementasset/liability managementmanagement of investment portfolios and actuarial reservesmanagement of investment portfolios and actuarial reserves

Elements of MicroElements of Micro--insurance Sector Growth and Development: insurance Sector Growth and Development: Internal DynamicsInternal Dynamics

Market – member satisfaction

Policy and Regulation

Passion of social entrepreneurs/leaders

Competence of managers and professionals

Balanced sector growth

CARD MBA

Some commercial insurance companies are biased to micro-entrepreneurs because of the

size of THEIR BUSINESS.

MICROINSURANCE is afor micro-entrepreneurs.

SAFETY NET

is another WEAPONMICROINSURANCE

Why Microinsurance ?C

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MICROINSURANCE complements the microfinance operations

for poverty alleviation.

“ If the goal of microfinance is putting money in people’s pocket,the goal of microinsurance is putting

tranquility in people’s hearts at time of crisis ”AM Dimaculangan

FUNERALHOSPITAL MEDICAL

EXPENSES

DEATHSICKNESSDISABILITY

INCOME FROM

MICROCREDIT

MICROINSURANCE CAN BREAK THE

CYCLE OF POVERTY

Why Microinsurance?C

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CYCLE OF POVERTY CAUSED BY MISFORTUNEINCOME FROM MICROCREDIT REMAINS !!!

“ TODO-TODONG BENEPISYO AT PAGLAKI NG PONDO

AY KAYANG-KAYA KUNG TAYO AY SAMA-SAMA”

Our Value Proposition ……C

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TRANSLATION:

Giving all types of benefit to the members and increasing the fund …can easily be done if we work and stay together….

PRODUCTS & SERVICES1. LIFE INSURANCE PROGRAM with the following features:

1.1. Accidental Death1.2. Total & Permanent Disability1.3. Motor Vehicle Accidental Hospitalization (MVAH) benefit 1.4. Refund of Contributions

2. RETIREMENT SAVINGS FUND with special feature of contribution refund

3. ALL LOANS INSURANCE PACKAGE with Automatic Loan Offsetting After Disability (Auto-LOAD)

4. REFUND OF CONTRIBUTION

NON-FINANCIAL SERVICES1. Mass Wedding2. CARD Disaster Relief Assistance Program3. Credit Bureau

Products and Services…C

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Cape Town, South Africa (05-06-07)

STANDARD OPERATING PROCEDURES OF RUNNING A

MICROINSURANCE

SCHEME

(CARD MBA Context)

CARD MBA’s SOP …C

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REFUND OF CONTRIBUTION

(WITH 3 YEARS OF CONTINUOUS MEMBERSHIP)

DEATH / TPD

PAYMENT OF WEEKLY CONTRIBUTION

RESIGNATION / TERMINATION RETIREMENT

PAYMENT OF DEATH / TPD

CLAIMS

PAYMENT OF RETIREMENT

BENEFIT

ISSUANCE OF MEMBERSHIP CERTIFICATE

Claims Settlement …C

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1Within 24 hours

upon notification, claim for indemnity must be settled if

the dead body is not yet buried at the

time of validation.

3Within three days

upon notification & with complete

documents, claim for indemnity must

be settled if the dead body is already

buried at the time of validation.

5Within five days

upon notification, difficult claims will

be given action with finality.

1-3-5-day Target in Claim’s Settlement

BOAT PROGRAM

Build Operate And Transfer ProgramC

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1. Are you willing to provide microinsurance products to your members ?

2. Do you have Php 5 million for guarantee fund?

3. Do you have the capacity to run your own micro-insurance program?

Get into the BOAT of CARD MBA…

YES

NONE

NONE

VALUE PROPOSITIONS of the BOAT PROGRAM1. MEMBERSHIP

The members of BOAT Partner will be members of CARD MBA enjoying the same benefits that of CARD members.

2. PERIOD OF ENGAGEMENT: THREE YEARSDuring the 3-year period, there will be technical assistance

and transfer of technology in the management of a mutual benefit association.

3. DISENGAGEMENTAfter three (3) years, all those entitled for the refund of

contribution will be turned over to the BOAT partner’s own MBA together with their refund of contribution to become their seed capital.

Build Operate And Transfer ProgramC

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PARTNERSHIP

CARD MBA PRESENTATION

WORK PLAN andPRO-FORMA MOA

REVIEW

ASSESSMENT OF BRANCH & CENTER

ACTIVITIES

DEVELOPMENT ofIMPLEMENTING RULES

and FINALIZATION of MOA

TRAINING of the MANAGEMENT TEAM

and MOA SIGNING

The BOAT FrameworkThe BOAT Framework

“Get into the BOAT of CARD MBA” “Get into the BOAT of CARD MBA”CARD MBA

MRI

ASSESSMENT &MONITORING

FINALIZATION ofIMPLEMENTING

RULES

E.Z. FOUNDATION(BANCO NG

MASA)

QUIDAN – PIKFI

USWAG

THE BOAT PARTNERS

“Assisting people in coping with uncertainties…”

CaMIA…C

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1. Established in June 15, 2007 and was registered with Securities and Exchange Commission on August 2, 2007 with its own separate Board of Directors.

2. The main objectives of the Agency are:

To conceptualize microinsurance products as needed by the members of CARD MRI and its affiliates.

To serve the identified insurance needs of CARD MRI and its affiliates thru partnership with various insurance companies.

CaMIA PAID Plan…C

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CaMIA Packaged Assistance In case of Disaster Plan(CaMIA PAID Plan)

“If misfortune befell upon you, consider your claim PAID”

3-in-1 Insurance Package

CaMIA PAID Plan…C

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AMOUNT OF BENEFITIF ACCIDENT RESULTED TO

Php 50,000.00Loss of sight of one eye

Php 50,000.00Loss of one hand OR one foot

Php 100,000.00Loss of one hand and one foot

Php 100,000.00Loss of one foot and sight of one eye

Php 100,000.00Loss of one hand and sight of one eye

Php 100,000.00Loss of both hands or both feet or sight of both eyes

Php 100,000.00Death

Benefit 1PERSONAL ACCIDENT up to Php 100,000.00

CaMIA PAID Plan…C

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TWO YEARS AND ABOVE

ONE YEAR BUT LESS THAN TWO YEARS

Php 20,000.00Sickness

Php 20,000.00Accident

Php 20,000.00Suicide

Php 20,000.00Sickness


NONESuicide

Php 20,000.00Sickness (not pre-existing)


NONESuicide

Pre-existing condition

CAUSE OF DEATH

NONE

LESS THAN ONE YEAR

AMOUNT OF BENEFIT

NUMBER OF CONTINUOUS YEARS

INSURED

Benefit 2FUNERAL BENEFIT of Php 20,000.00

CaMIA PAID Plan…C

AR

D M

RI I

nsur

ance

Age

ncy Benefit 3

RESIDENTIAL HOUSE RECONSTRUCTION START-UP CAPITAL up to Php 10,000.00

Depends on the percent of damage but not more than

Php 10,000.00 with Php 500.00 deductible

Natural Calamities such asFLOOD, EARTHQUAKE,

TYPHOON and VOLCANIC ERUPTION

FIRE

CAUSE OF DAMAGE

Depends on the percent of damage but not more than

Php 10,000.00

AMOUNT OF BENEFIT

Sample of CaMIA PAID Plan

Certificate of Coverage- This portion will be given to

the insured as proof ofpayment and coverage

Return Stub- This portion will be returned

to CaMIA/CARD MBA uponcompletion

Coverage of the PAID PlanCoverage of the PAID PlanC

AR

D M

RI I

nsur

ance

Age

ncy

Annual Premium: Php 250.00

Effectivity:

The Certificate of Coverage (CoC) shouldbe completely filled-out together with thesignature of the insured.The CoC will take effect upon submissionof the Return Stub to the CaMIA HeadOffice or to the nearest CARD MBA Provincial Office.

Period of Coverage: One (1) Year (renewable yearly)

Eligibility: 18 to 60 years old

Operations Update as of May 31, 2008C

AR

D M

RI I

nsur

ance

Age

ncy

475,800.00285,800.00190,000.00Amount of Claim

81783No. of Claim364,797.77238,392.09126, 405.68Net Income (Loss)

259,059.66193,170.9165,888.75Commission:

PAID Plan

11,8326,5835,249No. of Plan Sold

1,608,306.351,608,306.35800,801.07Total Assets

2,958,000.001,645,750.001,312,250.00Gross Premiums

TOTAL Year to Date

2008(April - May)

2007-08Beg. balancePARTICULARS

History and Institutional Background

A short glimpse on the history of Rural Bank of Talisayan will enable us to understand RBT-Mutual Benefit Association

beginnings.

It was during the 1965 Christmas party at the municipal hall of Talisayan, attended by local officials and some guests from Manila when the late Reserved Colonel Alejandro Go Beltran Sr. asked the town mayor on how he can be of help to the people of Talisayan. The town mayor candidly and quickly replied, “ Why not establish a rural bank?” Fortunately, during that time, the Central Bank of the Philippines was promoting a new banking system in order to develop the countryside wherein each town must have its own bank. By March 10 of the following year, the said aspiration of the town mayor became a reality; “Rural Bank of Talisayan” was established.

Since its inception, the bank’s priority is the upliftment of the quality of life of the less privileged sector of the society. It aims to empower people from all walks of life. It initially directed its focus on providing financial assistance to the coconut farmers and fisher folks. The bank struggled and survived economic difficulties during the dark days of the Philippines.

SUSTAINING STAGE

(1966-1975)The main concern was on sustaining the operations with only 2.7 million assets and reaching out to the target communities. The founders braved all unfavorable conditions just to bring the good news to the needy people.

BRIEF HISTORY OF RBT“The best way to predict the future is to INVENT it”

1

SURVIVAL STAGE

(1976-1985)This decade marked the dark years of our country’s history. With Martial Law in enforcement and with an economy that was not promising, the bank steadily continued to be resilient bringing in more assets to 6.6 million.


2

INNOVATIVE STAGE

(1986-1995)

The rural banking system continued to survive and introduced more innovations in products and services. Assets reach 23 M and Loan portfolio of 17.5 M


3

EXPANSION STAGE

(1996-2005)It is in this stage that RBT expanded its operations as evidenced by the branches that were set up in Jasaan and Salay, all in Misamis Oriental. The current assets have reached to 158 million, total loan portfolio of 111 M and has a workforce of more than 108 personnel as of December 2004.


4

EXPANSION STAGE

(1996-2005)From the traditional agricultural lending assistance to farmers, fisher folks, and employees of government and private sectors, RBT ventured into microfinance banking in 1998 extending loans to small and micro entrepreneurs particularly, women in partnership with the PCFC. It replicates the Grameen banking approach coupled with MABS technical assistance for individual lending.

4

QUANTUM LEAP STAGE

(2006-2015)The era of modern management using the information technology, opened the gates to global market thereby creating a borderless economy. The issue of bigness and diversification is our greatest challenge for our survival.


5

MSO COORDINATING FUNCTIONMSO COORDINATING FUNCTION

MSO

RBT BANK

AGB

RBT COOP

RBT MBA

Cooperation is Christianity in

Action

Towards one

To make its member organizations top players

in each’ own field, providing the needed products & services to

clients and members for the wholistic upliftment of the community through a

unified and cohesive operation.

V I S I O NV I S I O N

RBTRBT--Mutual Benefit Association Mutual Benefit Association MilestonesMilestones

January 2, 2006 January 2, 2006 –– Launching of RBTLaunching of RBT--Mutual Mutual Benefit AssociationBenefit AssociationJuly 5, 2006 July 5, 2006 –– RBTRBT--MBA was officially registered MBA was officially registered with the SEC.with the SEC.September 16, 2006 September 16, 2006 –– RBTRBT--MBA was License by MBA was License by the Insurance Commission.the Insurance Commission.March 10, 2007 March 10, 2007 –– RBTRBT--MBA 1MBA 1stst Annual General Annual General Assembly.Assembly.August 2007 August 2007 –– RBTRBT--MBA reached the 10,000 MBA reached the 10,000 members.members.

RBT – MUTUAL BENEFIT ASSOCIATION, INC.

Report on Membership and Claims for the year 2006 to June 2008

“To deliver quality micro insurance products and services to in need Filipino families”

VISION

To deliver quality Microinsurance Products and Services to in need Filipino Families.

MISSION“ A top Microinsurance provider in the Philippines”

6723

12490

15400

02000400060008000

1000012000140001600018000

2006 2007 2008

CLAIMS PAID ON LIFE INSURANCE(in thousand Php)

70,500.00

329,000.00

224,000.00

0.00

50,000.00

100,000.00

150,000.00

200,000.00

250,000.00

300,000.00

350,000.00

2006 2007 2008

NUMBER OF CLAIMS ON LIFE INSURANCE2006

21

6

Member Spouse Children

NUMBER OF CLAIMS ON LIFE INSURANCE2007

6 5

28


NUMBER OF CLAIMS ON LIFE INSURANCEas of June 2008

55

17


CLAIMS PAID ON MEDICAL REIMBURSEMENT(in thousand Php)

103,359.00

289,424.90

176,208.00

0.00

50,000.00

100,000.00

150,000.00

200,000.00

250,000.00

300,000.00

350,000.00

2006 2007 2008

NUMBER OF CLAIMS ON MEDICAL REIMBURSEMENT 2006

1764

23


NUMBER OF CLAIMS ON MEDICAL REIMBURSEMENT 2007

79

45173


NUMBER OF CLAIMS ON MEDICAL REIMBURSEMENTas of June 2008

67

38

83


Empowering the Poor throughASKI Mutual Benefit Association

TEL.NO. (44)463-1246EMAIL : [email protected]

Yellow expresses carefor the welfare of its members

Green represents hopeBlue stands for the official color of ASKI

ASKI MBA was established and registered in 2006

This represents the official logo of Alalay sa Kaunlaran (ASKI), Inc. wherein

which ASKI MBA was born.

represents Mutual Benefit Association supporting ASKI’s vision, mission and goals.

The bold letter means strength andstability as expressed in ASKI MBA’s vision:“ A highly competitive, reliable, sustainable

mutual benefit association” .


VISIONVISION

A highly competitive, reliable sustainable mutual benefit

association.


MISSIONMISSION

To provide a comprehensive microinsurance program for

the security of members.


GOALS & OBJECTIVESTo promote the welfare of the poor;

To extend financial assistance to its members in the form of death benefits, medical subsidy, pension and loan redemption assistance;


GOALS & OBJECTIVESTo ensure continued access to benefits/resources by actively involving the members in the direct management of the association that will include implementation of policies and procedures geared towards sustainability and improved services.


SEC RegistrationSEC Registration

Registered with the Securities and Exchange Commission (SEC)

Reg. No. CN200606766June 21, 2006


Licensed with ICLicensed with ICLicensed under the Insurance Commission (IC)

No. 2008-13-R


OperationsOperations

Pilot operations – December 1, 2006 (Covering 1 ASKI Branch)Full operations – January 1, 2007ASKI Branches covered – 9 branches


Why Microinsurance?Why Mutual Benefit Association?


CRGFCRGF

In 1995, seeing clients’ needs in times of sickness, ASKI, through its Credit Risk Guarantee Fund (CRGF), started giving financial assistance to its clients for their hospitalization and medical expenses

Php500 (US$10) - Php1,000 (US$20)


MAF ProgramMAF ProgramMutual Aid Fund Program introduced in 1999

Recognizing that CRGF financial assistance is not sufficient as a response to the difficulties encountered by the clients and their families in time of death and/or serious illnessIn order to mitigate the risk of accounts becoming uncollectible due to death and disability


MAF ProgramMAF ProgramBenefits:

Death of Member – Php120,000 (US$3,000 )Death of Spouse/Child – Php60,000 (US$1,500 )


MAF Program Facing RiskMAF Program Facing Risk

The MAF Program, however, though was able to lessen the credit risk of the Organization and improve client serve was faced with another risk… the risk of exhausting its program fund and not being able to pay for the benefits due to its clients


MAF program did not undergo formal actuarial studyMAF program does not have a guaranty fund that will ensure payment of benefits

MAF Program Facing RiskMAF Program Facing Risk


New MAF ProgramNew MAF ProgramThus, in 2000, ASKI, recognized for its “microfinance plus” programs introduced the New MAF under the group life insurance with an external commercial insurance providerThe New MAF was intended as a transitory program…for the Mutual Benefit Association


ASKI MBAASKI MBA

In 2005,ASKI, as an incorporator, joined other

microfinance institutions (MFIs) in organizing RIMANSIRIMANSI through the support of CARD MBA and CCA, conducted an actuarial study on the potentials of ASKI MBA

In 2006, ASKI MBA was born.


ASKIASKI’’s Triple Bottom Lines Triple Bottom Line

Having an MBA was a move to attain the triple bottom line, that is

outreacoutreachh viabilityviability

transformatiotransformationn


OutreachOutreach

Affordable premium attracts more clients/cater to the unserved portion of the poorAs of June 30, 2008

Members – 19,140Insured members of the family - 76,000 (approx.)


Affordable premium contributionsAffordable premium contributions

Membership fees“One-time”

Php 300 (US$7.50)

Weekly contributionPhp 30 (US$0.75)


ViabilityViabilityViability ensured…

undergone actuarial studyregulated by the Insurance Commission (IC)Guaranty fund deposited at IC


Highlights of OperationsHighlights of Operations

4.1

11.6

7.1

1.5

6.1

3.8

0.5

1.9

1.1 2.1

3.7

2.3

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

JUNE 2007 DEC 2007 JUNE 2008

UnderwritingincomeUnderwritingexpenseOperatingexpensesNet income

Revenues and expenses


Highlights of OperationsHighlights of Operations

8.6

13.7

5.4

8.2

3.2

5.5

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

DEC 2007 JUNE 2008

Assets

Liabilities

Members Equity

Financial Position


TransformationTransformation

Products designed to cater to the needs of the clients based on a survey and actuarial studyBenefits acts as a safety net for the clients and their families in time of loss


Income flows back to members in form of improved benefit package

TransformationTransformation

Benefits

ASKI MBA


Attractive Benefit PackageAttractive Benefit Package

Member- Death & TPDPhp 120,000

(US$ 3,000)

Spouse– Death

Php 20,000(US$ 500)

3 legitimatechildren - death

Php 10,000

ASKI MBA

ASKI MBA

ASKI MBA

Equity Refund = 50% of total premium contributions


TransformationTransformationIncome flows back to members in form of capacity building

Microinsurance Lakbay Aral (Exposure Training– CARD MBA


MBA Coordinators Training

Microinsurance Forum


TransformationTransformationClients own and manage the MBA (clients in ASKI MBA Board of Trustees)


TransformationTransformationEmpowerment of the poor

ASKI MBA Board of Trustees trained on board governance, leadership, microinsurance operationsClients equipped and can participate in the policy and decision-making of their own MBAClients elected as MBA CoordinatorsClients contribute something to the community by ensuring a well-managed and client-sensitive microinsurance program.Thus, we can say that ASKI MBA truly is a venue to empower the poor.


Main StrategyMain Strategy--MOA with ASKIMOA with ASKI

ASKI as AdvisoryManagement servicesASKI as marketing & collection agent


JoysJoysFirst year of operation

Setting-up of operational policies and proceduresInitial design and pilot-testing of automated MISSupport from partners – ASKI and RIMANSIAttaining positive result of operations in the first year


Challenges and Current Challenges and Current InitiativesInitiatives

Increasing guaranty fundFinalization and installation of MISExpansion of program

Thank you!Thank you!ASKI MBA 2007

For E

valuation Only.

Copyright (c) by F

oxit Softw

are Com

pany, 2004 - 2007E

dited by Foxit P

DF

Editor

Documents

Micro Insurance Compilation