Mutual benefit associations: A global model for microinsurance


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In another win for Philippine financial inclusion, the latest data from the Insurance Commission (IC) showed that insurance contributions from low-income people hit ₱13.53 billion in 2023, up by 17.35 percent from ₱11.53 billion in 2022.  The increase was driven by higher premium collection across all sectors, with mutual benefit associations (MBAs) contributing the most (₱7.48 billion), followed by life and non-life insurance companies (₱3.66 billion and ₱2.39 billion, respectively).

As of year-end 2023, the number of Filipino lives insured under microinsurance has reached 52.62 million. Once more, MBAs insured the highest number of Filipino lives (28.62 million), followed by life insurance companies (15.64 million) and the non-life insurance sector (12.36 million).

Microinsurance products offer risk protection for low-income households or those with limited savings.  Many Filipinos who buy microinsurance are daily wage earners, to hedge against various risks, such as death, injury, and damage to livelihood or property.  They are very affordable, offered at premiums that cannot be more than 7.5 percent of the daily minimum wage in Metro Manila.


Championing microinsurance 

In the Philippines, microinsurance has proliferated largely due to microfinance institutions (MFIs) that cater to the marginalized sectors. Leading the advocacy is the Microinsurance MBA Association of the Philippines, Inc. (MiMAP), which shares best practices and guides MFIs/MBAs in the sustainable provision of microinsurance that meets legal requirements. 
I have written many articles about the effectiveness of the MBA model as a risk protection mechanism for the poor and driver of financial inclusion in our country. Per IC data released just last May, MBAs continue to dominate the microinsurance industry: insuring 50.54 percent of Filipino lives insured by microinsurance and contributing 55.26 percent of microinsurance premium production.

Not surprisingly, our MBA model of microinsurance is generating a lot of interest from insurance providers and financial inclusion advocates worldwide.
Efficient, pro-poor, sustainable 

Studies show that microinsurance tops the list of MFIs’ most-liked products. MBAs are tailor-fitted to MFIs’ service delivery model, as they are formed by microfinance clients to provide microinsurance to members. Being member-owned and managed, with experienced professionals hired as full-time staff, MBAs develop microinsurance products that are affordable and responsive to what poor people need.  Although the premiums are very low,  microinsurance products usually cover the members, their spouses and minor children.  
Working with partner-MFIs is a unique feature of MBAs.  Overhead costs are minimal because premium collection is done by MFI field staff. MBA coordinators elected from the ranks of client-members attend the weekly center meetings to validate claims. Further revalidation is done by MFI field staff to prevent fraud. 

MBAs have revolutionized claims payment with what is now popularly known as 1-3-5 scheme: claims with simple documentary requirements are paid within the day;  if there are questions, claims are paid within three days; and if there are other issues, a decision must be made (whether to pay or not) by the fifth day. With the advent of digitalization, claims are now processed within eight to 24 hours, with payments released via ATM, GCash, Paymaya, Konek2CARD, remittance and other digital channels.  


Global model

In previous industry forums, IC Commissioner Reynaldo Regalado has pointed out the uniqueness of microinsurance MBAs and challenged us to export this very successful model globally.  It is, after all, one of a kind, with a rate of expansion that is unprecedented. 

We are now trying to respond to this challenge. Whenever I attend conferences here and abroad, I talk about our MBA model. I mentioned it during the Alliance For Financial Inclusion’s Global Policy Forum held in Manila last September. I was also in London on May 30 upon the invitation of the International Cooperative and Mutual Insurance Federation (ICMIF), which has 210 member-organizations in 55 countries. Through a virtual conference, I talked  about CARD MBA and MiMAP/RIMANSI, and noted that many were eager to learn about our MBA model. Many ICMIF members from emerging markets are interested to learn more from us. 

Also last May, in Bahrain, where I was a panelist in the fifth World Entrepreneurs Investment Forum, there was also a great deal of interest when I talked about microinsurance MBAs. I have already received a number of invitations from interested organizations in Ghana, Nigeria, Bahrain, among others. Some MFIs in Pakistan also want to learn about CARD MBA’s technology through its build-operate-transfer (BOAT) program. 

Sometime this year, we hope to partner with UNDP Bangkok and the ICMIF Foundation to run an MBA exposure program for insurance regulators and MFI practitioners, targeting Thailand, Vietnam and Indonesia. The ICMIF Foundation plans to help us in making the MBA model not only a regional program to be replicated in other Asian countries, but also globally.

We are happy to contribute whatever we can to promote microinsurance MBAs, so that more poor people can be protected and financially-included worldwide.
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“In the Philippines, microinsurance sells itself.” – Insurance Comm. Reynaldo Regalado

(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).)