‘Three-in-one’ microinsurance product planned

REGULATORS want to introduce a “three-in-one” product to the fledgling microinsurance market, capitalizing on the Filipinos’ penchant for cheap, convenient products and to boost protection for the poor.

They are still at the stage of finalizing the product, for now dubbed “Buhay, Bahay at Kabuhayan,” but already have inquired if they can start developing and marketing it.

“It’s a simple yet powerful product,” said Joselito S. Almario, a director at the Finance department and deputy executive director of the National Credit Council, which the Finance department heads.

The product is designed to give P10,000 coverage against death from accident or damage to property/business from natural calamities. One may buy three units for a total coverage of P30,000. A contract is good for a year.

“It’s a composite, a three-in-one,” said Mr. Almario, adding that no insurer at home or abroad is known for selling this bundle.

“If something happens to you, an accident and you die, then your beneficiaries get P10,000,” he explained. “If your home or business or place of business gets damaged by flood or an earthquake, then you get P10,000.”

Regulators, he said, are constantly seeking ways to provide social nets for the poor — the slowest to recover after personal or natural calamities — without burdening them with high premiums.

The technical group that is working on “Buhay, Bahay at Kabuhayan” still has to compute the final premiums but these shall hew to guidelines set in Insurance Memorandum Circular 1-2010 that state premiums on a daily basis must not exceed 5% of the daily minimum wage of nonagricultural workers in Metro Manila, which is currently at P404 daily.

The Philippine microinsurance industry is still in its infancy, with the National Strategy and the Regulatory Framework for Microinsurance released only in January 2010.

Yet it is fast-developing. After the IC came out with Insurance Memorandum Circular 1-2010 that defined microinsurance, the agency issued, together with the Securities and Exchange Commission and Cooperative Development Authority, another circular closing down informal insurance or insurance-like activities.

The Bangko Sentral ng Pilipinas also came out with a circular allowing rural, cooperative and thrift banks to market and sell microinsurance products within their premises.

Commercial insurers, mutual benefit associations and cooperatives are now selling microinsurance products, but in singles, not “three-in-one” as contemplated in “Buhay, Bahay at Kabuhayan.”

Considered a pioneer in the field of microinsurance, the Philippines will share its experiences during the 6th Microinsurance International Conference that takes place starting tomorrow to Thursday.

Manila is this year’s host of the annual gathering.

Mario C. Valdez, general manager of the Philippine Insurers and Reinsurers Association (PIRA) that groups the country’s 80-plus non-life insurers, claimed that “several” PIRA members expressed interest in the product after it was unveiled during an October 11 association conference.

“Buhay, Bahay at Kabuhayan” will be considered a non-life product.

“They were enthusiastic about it. They said they want to develop it, as it suits their clients’ needs,” Mr. Valdez said.

There is demand for this product, he claimed, with many victims of tropical storm Ondoy, which ravaged Luzon last year, regretting not having insurance against calamities.

“With this product, we hope to help the poor get back on their feet,” Mr. Valdez said.

“It’s also a way for non-life insurers to expand their market,” he added.

“Right now, they are competing for a small market, and the IC will require they have a P125-million capitalization by December. Microinsurance opens up a new market and provides a venue for them to make returns on their additional capitalization,” Mr. Valdez said.

The technical working group, headed by the Finance department, targets to launch the final “Buhay, Bahay at Kabuhayan” policy contract before yearend.

Other members of the technical working group are the IC, PIRA, National Credit Council, Philippine Life Insurance Association, Inc. and the Actuarial Society of the Philippines.

The group enjoys technical assistance from the GTZ or German Technical Cooperation. –JUDY T. GULANE, Sub-Editor, Businessworld