MICROINSURANCE: POLICY AND REGULATORY REFORM INITIATIVES -THE PHILIPPINES

BUILDING TRUST, BUILDING BRIDGES

“MUTUAL MICROINSURANCE: WHY? & HOW? FROM A REGULATORY PERSPECTIVE”ICMIF-AOA DEVELOPMENT NETWORK SEMINAR ‘ IMPROVING ACCESS TO INSURANCE’18-20 SEPTEMBER 2013, MAKATI CITY

JOSELITO ALMARIODEPARTMENT OF FINANCE, PHILIPPINES

WHERE ARE WE BEFORE

ABSENCE OF POLICY AND REGULATORY

FRAMEWORK

• Vague government policy direction

• Unclear regulations and guidelines on microinsurance

• Hesitant providers

INAPPROPRIATE PRODUCTS

• Not tailor-fitted• Unaffordable• Complex and

complicated contracts

• Cumbersome requirements

LACK OF AWARENESS

• Distrust of insurance providers

• “Leave it to destiny” mentality

• No immediate benefits

• Additional financial burden

THE BEGINNINGS - 2006• Microinsurance driven by

successes in the microfinance sector

• MFIs form informal insurance schemes, some MBAs, to meet insurance needs of their clients

• Government responds by issuing guidelines for MBAs to deliver microinsurance

• Policy adopts principle of proportionality

THE EXPANSION - 2009

GOVERNMENT SECTO

R

PRIVATE

SECTOR

TECHNICAL WORKING GROUPS

POLICY/ REGULATORY BODIES

INSURANCE PROVIDERS (LIFE/NONLIFE - COMMERCIAL, COOPS, MUTUALS)INTERMEDIARIESMICROFINANCE INSTITUTIONS

PUBLIC CONSULTATIONS

WHAT WERE COVERED

Market ConductProduct

Innovation and Development

Financial Literacy and

Advocacy

Consumer Value and Protection

POLICY AND REGULATORY

ENVIRONMENT

WHAT WERE DONE

2010

2011

2012

• Microinsurance Defined• Microinsurance Providers

Identified• Branding and Slogan Conceived• Formalization Process Clarified• Microinsurance Agents/Brokers

Created (CBOs included)• Prototype Product Developed• Contracts Simplified• Performance Standards

Formulated• Reporting Standards Established• MBA Chart of Accounts Revised• Trainings on MI Advocacy and

Seminars • Alternative Dispute Resolution

Mechanism Established

July 2013

WHERE ARE WE NOWCOMMERCIAL PROVIDERS• 2008 - 2• 2012 – 35 (Life – 17, Non-life - 18)

MUTUAL BENEFIT ASSOCIATIONS• 2008 - 6• 2009 - 19

PRODUCTS APPROVED• 2008 – 7• 2012 – 89 (Life – 38, Non-life – 25, MBAs – 26)

INDIVIDUALS COVERED• 2008 – About 3 million (mostly credit life including

informal insurance)• 2012 – 12 million

WHERE ARE WE HEADED

Agriculture/Catastrophic Microinsuran

ce

Parametric/ Index-based

Products

POS/ Technology –

based Delivery Platforms

WHAT ARE THE LESSONS LEARNED

Clear rules and regulations provide

better understanding and transparency

Consistency of implementation

results in predictability –

branding can help

Financial literacy is educating, not

marketingAdvocacy is

convincing, not selling

Localized and simple alternative

redress mechanisms

promote effective after-sales service

A CONDUCIVE AND ENABLING POLICY AND REGULATORY ENVIRONMENT –

BUILDS TRUST, BUILDS BRIDGES

www.microinsurancephil.blogspot.com