Evolution of CARD MBA and its impact to microinsurance industry
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This presentation was delivered by Ms May Dawat (General Manager at CARD MBA, The Philippines) at the ICMIF-AOA Development Network Seminar (18-20 September 2013; Manila, The Philippines)
Transcript of Evolution of CARD MBA and its impact to microinsurance industry
In December 1996, the Pension Plan was implemented to provide retirement, medical and disability benefits to members. This product became popular its member-clients. Unfortunately, CARD had not adequately assessed the impact of this product to the institution
In April 1994, established the Member’s Mutual Fund (MMF), an informal insurance-like activity, created for the primary purpose of loan redemption in case of death of member-borrowers.
The Management also realized that the whole institution was at risk and fulfilling its obligation to members would DECAPITALIZE CARD leading to potential bankruptcy. The Pension Plan was stopped after a couple of years of its implementation.
In 1998, an assessment was done, CARD realized that a member would contribute for two years just to cover one month of pension benefit.
To Avoid Co-Variant Risks
The Need for Business Focus
The Need for Proper Product Costing
The Need for Separate Management Information System [MIS]
The Need to Develop Insurance Culture
The Management concluded that an insurance business should not be tied to the capital of a microfinance institution (MFI).
On October 29, 1999, it was registered with Securities and Exchange Commission (SEC).
An Actuary assessed the risks and helped re-price the products.
On September 9, 1999, the management of MMF was officially turned over to the members and assumed a new name, CARD Mutual Benefit Association, Inc. or CARD MBA, a separate legal entity, non-stock, non-profit, owned and managed by the members.
On May 22, 2001, obtained license from the Insurance Commission to operate as mutual benefit association.
Registration and licensing entails different sets of documentary requirements of SEC and IC. And, recurring review of IRR and related documents.
High capitalization requirement for licensing new MBAs, the Php 10,000 capitalization initially prescribed by the Insurance Code was raised by IC in IMC No. 2-2006 to Php 12.5 million. This was lowered to Php 5 million thru the issuance of IMC No. 9-2006.
Capacity-building interventions are needed to further improve the governance, management and operations of MBAs.
Need to strengthen the MBAs in planning and marketing, developing MIS, improving products and enhancing operating manuals.
Monitoring the development and sustainability of institutions offering microinsurance products and services.
Review and development of performance standards and indicators applicable to all providers of microinsurance.
Strengthening of regulations to support microinsurance and safeguard the interest of microinsurance clients and the general public.
1. Innovates product and services based on actuarially sound computations and pricing.
2. Establishes Provincial Offices nationwide to reach the remote and hard-to-reach areas of affiliated MFIs.
3. Involves the members in the direct implementation of microinsurance program by creating MBA Coordinators who assist the management in claim validation and in promoting products and services.
4. Enhances capacity of the board of trustees to ensure excellent leadership and empowerment of members.
5. Improves financial stability, compliance and governance.6. Strengthen claims settlement process.7. Increases trust on microinsurance as manifested in the growth of
outreach.
Formalization enables CARD MBA explore various innovations to expand the reach of its microinsurance program:
…these are the reasons why formalization is encouraged.
Role of CARD MBA before more microinsurance regulations were introduced
Major Milestone of Microinsurance Regulation
“Microinsurance Regulation and Declaration of Policy Objectives,’
“National Microinsurance Month”
Major Milestone of Microinsurance Regulation
“National Strategy for Microinsurance,”
“Regulatory Framework for Microinsurance,”
Major Milestone of Microinsurance Regulation
“Regulations for the Provision of Microinsurance Products and Services”
“Defining Government’s Policy on Informal Insurance Activities,”
“Guidelines on the Treatment of Funds Collected from Informal Insurance Activities.”
1.1. Raising Public AwarenessRaising Public Awareness: : CARD MBA increased awareness and helped improve
understanding of microinsurance, especially among stakeholders. This resulted to increased in membership from 28,531 to 2.1 million.
2. Influencing Policy2. Influencing Policy: : CARD MBA being a member of Rimansi carved out a niche for
microinsurance in the government’s policy alleviation program and the regulatory framework for the insurance industry.
Results of formalization of Microinsurance MBAs and developments of microinsurance regulations:
4.4. Paving the Way for a Regional Microinsurance NetworkPaving the Way for a Regional Microinsurance Network: : CARD MBA and Rimansi has established its leadership position in the
field of microinsurance in the country and in other parts of Asia particularly in Cambodia, Vietnam, Indonesia and Laos.
3. Extending Risk Protection Services to the Poor and the 3. Extending Risk Protection Services to the Poor and the DisadvantagedDisadvantaged
CARD MBA and Rimansi was able to prove the merit of microinsurance delivered thru MFI-affiliated MBAs, convincing an increasing number of organizations to venture into microinsurance, formalize their operations and protect more economically challenged families. As of August 2013, CARD MBA has 13 BOAT Partners and Rimansi has 15 MI-MBA Partners.
20 M. L. Quezon St., City Subdivision, San Pablo City, LagunaTEL: (+6349) 562 4309FAX: (+6349) 562 0009EMAIL: [email protected]
