ADB's support for Emerging Microinsurance under JFPR9118: “Developing Microinsurance in PHI”
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Transcript of ADB's support for Emerging Microinsurance under JFPR9118: “Developing Microinsurance in PHI”
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ADB’s Support for Emerging Microinsurance under JFPR9118:
“Developing Microinsurance in PHI”
Hiroyuki AokiSenior Financial Sector Specialist, SERD/SEPF
Asian Development Bank
ICMIF-AOA Development Network Seminar20 September 2013Manila, Philippines
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Outline
Introduction – What is a Microinsurance? Past ADB’s Supports for Microfinance in
the Philippines JFPR9118: Developing Microinsurance in
PHI What We Achieved
Some Thoughts for Next Steps
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Introduction
What is a Microinsurance?
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What is a Microinsurance?
General Understanding: “Insurance service for the Poor”
One of Financial Services for the Poor? The Poor needs risk protection measures in addition
to credit, saving, remittance and payment services.
A Tool for Social Welfare or Social Protection?
Health/medical insurance for complementary to public health system, or alternative in some countries
Agro/Crop Insurance for the Farmers? Because the farmers are poor!
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What is a Microinsurance?
Assumption: Microinsurance is the insurance service to accommodate the cash flows of the Poor (sometimes called “affordability”).
Small Amount of Premium? Small policies means many transactions with small
amounts. New Technology to Reduce the Costs?
Mobile banking, e-payment or Paperless Policies, etc
Government Subsidy? Typical for Agro/Crop Products
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What is a Microinsurance?Challenge: How can we manage
various stakeholders under various constraints?
Policy makers
Regulators/Supervisors
Other Government Agencies Microinsurance Providers/Distributors
Beneficiaries
Communities/Local Governments
Development Partners
We need some common understanding!!!
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Past ADB’s Supports for Microfinance in the Philippines
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ADB Microfinance Development Strategy in 2000
Goal To ensure permanent access to institutional
financial services for the majority of poor and low income households and their microenterprises through the development of sustainable microfinance systems
Definition of “Microfinance” Broad range of financial services such as
deposits, loans, payment services, money transfers and insurance to poor and low income households and their microenterprises
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Philippine Microfinance Strategy
Approach Increased role of the private sector
Government to focus on establishing the enabling policy and regulatory environment
Adoption of market oriented financial and credit policies
Non-participation of government line agencies in implementing credit programs
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Past ADB Supports for Microfinance Microfinance Development Program
(2005-2007) A program loan that called for further
development of the microfinance sector through the strengthening of the microfinance policy environment, improvement of regulatory capacity, MFI capacity, and financial literacy
JFPR9088: Developing Financial Cooperatives (2006-2010) Support to the MDP program loan above Assisted the Government in further improving
the regulatory environment for credit and savings cooperatives engaged in microfinance services.
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JFPR9118:Developing Microinsurance
in PHI
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Why Microinsurance Development?
Past projects mostly address the savings and credit needs of the poor
With sustainable access to savings and credit services, both MFIs and government recognized the need for risk protection
Low income households need insurance to address their risk protection
Then, the need to develop the Philippine Microinsurance Industry
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JFPR9118: Developing MI in PHI
Four-year grant project with the following three components (2008-2012)
Component 1: Improving Regulatory Framework for Microinsurance
Component 2: Strengthening the Capacity of Government regulators and Microinsurance Providers
Component 3:Promoting Financial Literacy on Microinsurance
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What are the progress?
Component 1:Improving Regulatory Framework for Microinsurance
The Microinsurance Regulatory
Framework was prepared in 2009 The Performance Standards (PS)
“SEGURO” for Microinsurance was developed in 2010S for Solvency, E for Efficiency, G for Governance, U for Understanding of Product by Clients, R for Risk Based Capital and O for Outreach
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What are the progress?
Component 2:Strengthening the Capacity of Government regulators and Microinsurance Providers
The Module and Training Program on
the Performance Standards were developed and implemented for both Regulators and Microinsurance Providers in 2011/2012
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What are the progress?
Component 3:Promoting Financial Literacy on Microinsurance
The Materials for Financial Literacy
Campaign was developed in 2009 Regional Financial Literacy Roadshow
has been implemented in 2011/2012
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What We Achieved
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Formalization of Microinsurance Sector Approval and Launch of the Regulatory
Framework for Microinsurance
Revised Regulation on Microisnrance Products
Formalization of Informal Microinsurance Schemes
Training and Licensing of Agents
Insurance Commission has got the ability and responsibility to monitor the Microinsurance Industry and related reliable statistics became available!
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Market Development of Microinsurance Product Development
More variety of products from life and non-life, not just a credit life product (about 60 products in 2011, 40 life and 20 non-life)
Product ProvidersNew entries from insurance industry and diverse players in the market, MBAs, Cooperatives and Insurance Companies (44 providers in 2011, 17 MBAs, 2 Coops and 25 Insurance Companies)
Outreach 3.5 million policies were issued in 2011
26.7 million of population out of 90 million are below poverty line. Well above 10% coverage for the Poor.
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Some Thoughts for Next Steps