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A look into the future: Insurance in the Philippines

Business World Online, 24 November 2011

There are signs that the Philippines insurance industry may be heading towards a period of solid growth, with both the state and the private sector stepping up efforts to encourage the public to embrace insurance as a way of life. It will be some time, however, before the domestic market will be able to rival that of most of its neighbours.

Data compiled by Sun Life Financial Philippines, one of the country’s leading policy writers, illustrates that insurance penetration levels in the local market remain low at around 14%, which is well below that of regional markets.

At the end of last year, the Philippines was ranked the third-smallest insurance market in the East Asian region in terms of insurance premiums, ahead of only Macau and Brunei Darussalam, with the life insurance segment valued at under USD 2 billion.

The Insurance Commission has also been promoting microinsurance as an option to those in lower-income groups as a way of building financial security. These policies, which are increasingly being made available through licensed agencies in rural areas as well as in large cities, offer limited payouts but boast low premiums. Premiums for a standard microinsurance policy can range from around PHP 30 to 600 (USD 0.4 to 8.8) a month, with life, health and property policies being the main focus.

The government sees microinsurance as a useful tool to help alleviate poverty and to ease the threats posed by accidents, illness, deaths, or any catastrophe, said Emmanuel Dooc, the head of the Insurance Commission.

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Challenges and innovations of microinsurance in Indonesia

Kiva, 22 November 2011

This blog examines the various aspects of microinsurance in Indonesia, building on the content from the First Microinsurance Marketplace in Indonesia, an event that was jointly organised by the Indonesian Insurance Council, World Bank and the International Finance Cooperation (IFC).

The event hoped to provide an opportunity to showcase innovations in microinsurance, to identify grassroots level innovations, and finally to create an enabling environment for new approaches. The two day event aimed to create a marketplace environment rather than that of a traditional conference.

The blog examines the current challenges facing the industry based on presentations and discussions over the two days. Additional information is provided on product innovations and ideas that have recently been, or are going to be, introduced in Indonesia in an attempt to increase access to insurance for the poor.

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IRDA to revamp microinsurance in India

MyDigitalFC, 23 November 2011

The Insurance Regulatory and Development Authority (IRDA) is working on guidelines to revamp microinsurance products. IRDA wants to increase the life cover offered in these policies and reduce the premium, an IRDA official said. IRDA will also look at allowing insurers to look at different forms of distributions such as a banking correspondent-like model to increase the reach of microinsurance policies.

The new guidelines are aimed to improve the penetration of microinsurance policies. Microinsurance products are small ticket-size insurance policies. IRDA is looking at changing the definition of microinsurance policies to broaden the scope of microinsurance. Microinsurance policies are generally sold under group schemes.

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Insurers in Tanzania challenged by low-income market

AllAfrica, 21 November 2011

Stakeholders in Tanzanian insurance sector are being challenged to extend insurance cover to reduce the risks of the low-income population who are vulnerable to manmade shocks and natural disasters.

"The government will do everything possible to support varied insurance initiatives so that the sub-sector can take its rightful place in the financial sector," said Deputy Permanent Secretary in the Ministry of Finance and Economic Affairs, Ms Elizabeth Nyambibo.

The nature of the insurance industry is such that the consumers see it in the light of claim settlement. "Tanzania industry's statistics show that insurance consumer grievances have been increasing due to delays in settlement of claims," she made the remarks over the weekend at the 14th Annual Insurance Day in Dar es Salaam.

While the regulations are already in place to check the situation, the industry should consider whether the 14 years of market liberalisation have done enough on customer service practices particularly dealing with grievances. It is said that good insurance business runs on the basis that both the buyers and sellers are well informed. However, it is difficult in the insurance industry as the concepts and processes are found to be complex.

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Pilot microinsurance programme pays out in Ethiopia

Oxfam, 17 November 2011

Oxfam America, Swiss Re and the International Research Institute for Climate and Society (IRI) announced that their innovative microinsurance programme for small scale farmers in Northern Ethiopia had its first successful payout to affected policyholders this past weekend. More than 1,800 farmers in seven villages experienced drought conditions that triggered payouts. Each will get a share of the total USD 17,392 in payouts.

"The recent payouts show how even the poorest communities in Ethiopia can benefit from insurance when implemented through innovative programmes such as HARITA," says Christina Ulardic, Head Market Development Africa for Swiss Re's Corporate Solutions business.

The HARITA (Horn of Africa Risk Transfer for Adaptation) pilot was designed as a way for Ethiopia’s poorest farmers to get weather insurance for their crops, allowing more than 13,000 this year to buy themselves a bit of security against changing weather patterns. 

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Insurance brings security to Haitiís informal sector

Caribbean, 10 November 2011

A grant agreement supporting catastrophe microinsurance programmes in Haiti was signed into effect recently to give more security to lending institutions and their low-income borrowers in that disaster-prone country.

The grant was signed by the Microinsurance Catastrophe Risk Organisation SCC (MiCRO) and the Caribbean Development Bank (CDB). MiCRO is an innovative platform that provides customised reinsurance coverage to help protect lending institutions and their low-income borrowers against losses resulting from natural disasters.

The grant agreement provides claims-paying capacity to MiCRO for its Haiti programme via a multi-donor trust fund administered by the CDB and inaugurated in late-September 2011 following an initial contribution of USD 1.5 million by DFID.

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Microinsurance products offered by VFI in Indonesia

Kiva, 8 November 2011

According to the World Bank of Indonesia, more than 50% of Indonesians live on less than USD 2 per day/per person and more than 80% live on less than USD 4 per day/per person. In addition to this, they estimate that greater than one-third of households don’t have access to any formal financial services and microinsurance in the market is negligible.

To put this in perspective, the population of Indonesia is estimated at around 245 million and, in Indonesia today, about one third of the population, or about 77 million people have no financial protection or savings cushion.

A number of innovative products are currently being developed and implemented in Indonesia and this article examines some of the products that are being offered to clients of VisionFund Indonesia (VFI), a microfinance institution based in Indonesia.

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