Vulnerabilities DOF NCC

8/9/2019 Vulnerabilities DOF NCC

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The Philippine Poverty Situation

(2006)

Filipino

family offive neededP6,274

monthlyincome tostay out of

poverty

An

individualneeds

P15,057annually to

stay out ofpoverty

27 out of

100families are

poor or atotal of 4.7

millionfamilies

33 out of

100Filipinos

are poor ora total of

27.6 millionFilipinos


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In recent years, the poor were given

increased access to savings and credit

facilities (microfinance)

Only a fewlarge MFIs

with anoutreach of

less than half

a millionclients

1997

Over 2000 MFIsare nowoperating

7 millionmicrofinanceclients are beingserved

Largecommercialbanks haveentered the MFmarket

2009


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But savings and credit services are

not enough

The poor need to manage and cope withrisks such as:

Illness or injury,

Death of a family member, and

Manmade or natural disasters

When faced with these events, thecash flow and earning abilities of

the poor are affected.

Micro credit and savings alonedoes not protect the poor from

risks


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Of the 27.6 million poor Filipinos . . .

Only about 2.9 millionhave some kind of risk

protection

Almost half of which is

provided informally byvarious entities


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THUS the need for appropriate risk

protection for the poor

Need for products for risk protection that aretimely, reliable, dependable, affordable andaccessible

Need to improve on delivery mechanisms forappropriate and affordable risk protectionproducts

Need to protect the disadvantaged againstunreasonable, fraudulent and unscrupulous acts.


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To ensure access of the

poor to appropriate risk

protection

NationalSTRATEGY for

Microinsurance

REGULATORYFramework forMicroinsurance

The Pillars of Microinsurance Market

Development were put in place


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Major Players

Government

Intermediaries

DevelopmentPartners

SupportInstitutions

InsuranceProviders


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Key Strategies

Increased Accessto safe

Microinsuranceproducts and

services

Mainstreaming ofInformalInsuranceActivities

Enabling Policy andRegulatory

Environmentencourage greater

private sectorparticipation

Institutionalizationof Financial Literacy


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Scope of the Regulatory

FrameworkCovers insurance, insurance-like andother related activities that cover the

risk protection needs of the poor

Does not cover social insurance schemesand risk protection programs

administered and implemented bygovernment


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Who can Provide

MicroinsuranceCommercial Insurers (Life,Non-Life and Composite)

Cooperatives/CooperativeInsurance Societies

Mutual BenefitAssociations

Pre-Need Companies

Health MaintenanceOrganizations

Only

Regulated

Entities


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Mainstreaming of Informal

Insurance

Within 1 year:

Partner with a licensed

microinsurance provider

Buy a microinsurance productthrough a licensed agent or broker

Join an existing MBA or CIS;

Within 2 years, organizea microinsurance entity

Commercial Insurance

Insurance Cooperative

Mutual Benefit Association


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To ensure that informal insurance will be

under the regulatory environment


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Who cansell MI

Products?

Licensedinsuranceproviders

Regularagents and

brokers

Microinsuranceagent


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Microinsurance Product

Daily Contributions/premiums

not more than 5 percent of the current daily minimum wage

rate(P20.00)

Guaranteed benefitsnot more than 500 times the daily minimum wage rate.

(P200,000.00)


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Clearly state the face amount,

benefits, and terms of the insurancecoverage;

Can be easily understood by theinsured printed in English or Pilipino;

Documentation requirements aresimple;

Manner and frequency of

contributions/premium collectionscoincide with the cash flow of theinsured and are not onerous for theinsured.

Micro

insuranceContracts


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Special Regulatory Space for

Microinsurance Providers

Lowercapitalization

Expanded

admittedassets

Appropriate risk-

based capitalframework

Lower guarantyfund for MBAs


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Special Regulatory Space for

Microinsurance Providers

Shortenedsettlementof claims

SimpleDocuments

EnhancedProcessing of

complaints

Relaxed KYCrequirements


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Microinsurance Agents/Brokers

Not required to take the regular licensureexamination

shall undergo an approved Microinsurance Training Program

and pass a qualifying examination at the end of the Program.

License only covers the solicitation ofmicroinsurance products.

Microinsurance Brokers are required a paid-upcapital equivalent to half of what is required forregular brokers.


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Individuals/Entities

Institutions

engaged inmicrofinanceactivities

Primary

cooperatives

Who can be

licensed as

MicroinsuranceAgent/Broker


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Vulnerabilities DOF NCC

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