The Philippines has a strong mutual/cooperative tradition and informal risk pooling and underwriting is common. This, together with the growth of the microfinance industry, has been the driving force behind the development of microinsurance. Besides India, the Philippines is the only sample country where microinsurance is explicitly provided for in the insurance regulatory regime. However, whereas India created concessions for microinsurance on the intermediation side, the Philippines created a special prudential tier (with significantly lower minimum capital requirements) for the underwriting of microinsurance policies and linked this to the allowance for Mutual Benefit Associations (MBAs) in their Insurance Code. Filipino insurance regulation allows a great deal of institutional flexibility for formal insurers – they can be stock companies, cooperatives or MBAs, the latter having to be non-profit in nature. The microinsurance regulations also contain an innovative mechanism to facilitate formalisation of informal insurance operators: microinsurance MBAs who are unable to meet the minimum capital requirements up front, are allowed to increase their capital over time without having to forfeit their registration. Through these regulations, and some public awareness campaigns, the Filipino Insurance Commission triggered a move to formalise the currently informal sector. However, much informal activity remains.
A2I, Gates Foundation, IDRC, Cenfri