FROM THE MARGINS
January is National Microinsurance Month. Microinsurance is crucial to financial inclusion and has immense social and economic benefits because it provides poor people with safety nets to help them cope with unexpected shocks. Its growth was facilitated by the Insurance Commission in 2006, when then Commissioner Evangeline Escobillo issued Memorandum Circular No. 9-2006, defining microinsurance and rationalizing the guarantee fund requirements of microinsurance mutual benefit associations (Mi-MBAs) wholly engaged in the business of providing microinsurance for their members.
RIMANSI to MiMAP
In the Philippines, microinsurance has proliferated largely due to microfinance institutions (MFIs) and their MBA-affiliates. Leading the advocacy is the Microinsurance MBA Association of the Philippines, Inc. (MiMAP), which started out as the Risk Management Solutions, Inc. (RIMANSI) Organization for Asia and the Pacific. RIMANSI was a microinsurance and MBA resource center founded in 2005, to provide technical assistance to MFIs desirous of providing microinsurance to their members through MBAs. In 2015, RIMANSI became a formal association of microinsurance MBAs called MiMAP.
Insurance Commissioner Dennis Funa once wrote: with financial inclusion as MiMAP’s underlying advocacy, “the Insurance Commission has found a natural partner in its own advocacy of financial literacy, microinsurance, and promotion of insurance.”
MiMAP has a network of 19 Mi-MBAs with a combined membership of 7.8 million, insuring more than 29.3 million individuals as of June 2022. It has become the industry voice for microinsurance for the poor. According to their executive director, Junjay Perez, MiMAP transformed into a formal association of Mi-MBAs that share the same mission of greater financial inclusion to encourage participation in the ownership of the organization.
“Our collective mission is to reach 12 million members by 2024, insuring 48 million lives,” says Junjay, as he explained what he called the 12-24-48 mission of MiMAP.
Insuring millions
Through the years, the supportive policy and regulatory environment and the good collaboration established by MiMAP with the Insurance Commission (IC) provided the impetus for many MFIs to organize their own MBAs. Thus, microinsurance promotes not just financial inclusion but empowerment.
Mi-MBAs, whose members comprise the poor, remain the leading provider of microinsurance in the country. An IC press release in September 2022 stated that microinsurance providers were able to insure an estimated 44.81 million lives in the 1st quarter of last year. Of the 48 microinsurance providers, there were 23 MBAs, 11 life insurers, and 14 non-life insurers. MBAs had the largest market share in terms of the number of lives insured by microinsurance, accounting for 57.45 percent of 44.81 million, or 25.74 million lives.
Emma Luwague from General Santos City is certainly grateful for the microinsurance products she was able to access through her MFI. She sells dried fish (locally known as bulad) that her husband processes from fresh fish caught in their area. The family experienced tragedy in 2021, when their house and sari-sari store caught fire. They lost all their material possessions, but were able to recover since Emma received ₱10,000 from her Kabuklod Plan, an insurance product that covers personal accident, funeral benefits, and fire cash assistance for only ₱500 annual premium. She also received ₱30,000 from her Sagip Plan, a family insurance package that pays for personal accidents, funeral benefits, and damage from fire and natural calamities.
Making insurance accessible and affordable is important, especially in the Philippines, where financial and insurance literacy remain low. As Luz Lalap, an MBA member/microinsurance coordinator from Batangas, attests:
“Introducing the concept of microinsurance is not easy, as we need to break barriers and are often rejected by prospective clients. Still, I continue to promote microinsurance because I have seen first-hand how regret could consume poor families when tragedy strikes.”
With simple requirements and quick processing (claims are mostly paid within the day or at the latest, five days), microinsurance provides a lifeline for the poor. MiMAP has paid an average of 242 death claims per day, worth ₱6.25 million, as of September 2022.
Expanding coverage
Junjay, who has been with RIMANSI/MiMAP for 14 years, says their organization plans to strategically strengthen their membership and capacity building programs this 2023.
“We hope to expand MiMAP membership to Mi-MBAs outside of the network to share our best practices and performance benchmarking,” he explained. “Aside from replicating the Mi-MBA mobile app technology and enhancing the e-MUTUALS as the common Mi-MBA platform, we will advocate for the tax exemption of Mi-MBAs.”
To celebrate National Microinsurance Month, MiMAP is partnering with Citi Foundation to hold the National Microinsurance Forum this Jan. 26, 2023 at the Philippine International Convention Center. I send the best wishes to all forum participants as they explore how the microinsurance industry can evolve to serve a higher purpose in the post-pandemic era.
Microinsurance – a community-based and self-help initiative to provide risk protection for the disadvantaged and vulnerable sectors — deserves our full support. In the words of former BSP Governor Nestor Espenilla, Jr.: “The provision of microinsurance should be private sector-driven, with the government creating a supportive environment to ensure its safe and sound provision.”
(Dr. Jaime Aristotle B. Alip is a poverty eradication advocate. He is the founder of the Center for Agriculture and Rural Development Mutually-Reinforcing Institutions (CARD MRI), a group of 23 organizations that provide social development services to eight million economically-disadvantaged Filipinos and insure more than 27 million nationwide.)