More affordable insurance products needed for masses

Government is pushing for the introduction of more affordable insurance products for the poor and the establishment of a national retail payment system to achieve financial inclusion in the country.

Insurance Commissioner Emmanuel F. Dooc said micro-insurance is government’s main vehicle in bringing more Filipinos into the financial system.

Dooc said the Philippines has the highest micro-insurance penetration rate among the Asean (Association of Southeast Asian Nations) countries.

“Three years ago, penetration rate was 20 percent or 19.9 million Filipinos covered by micro-insurance and we have seen how it benefited a lot of the Filipinos during Yolanda,” Dooc said, referring to the typhoon that devastated central Philippines in November 2013.

The number of Filipinos covered by micro insurance went up to about 28 million in 2013.
After Yolanda, he said micro-insurers paid out over half a billion pesos, or an average of a little less than P5,000 to each insured family affected by Yolanda.

“That P5,000 paid to poor families is very significant because this is now different from the dole outs, the bag of groceries which they normally receive after a  disaster occurs. This did not only bring cash no matter how meager to the poor households, it also restored their dignity because of the micro-insurance policy that they purchased,” Dooc said.

He said the commission is looking to integrate its own inclusive insurance program in the national strategy to achieve financial inclusion.

Dooc is also supporting a proposal to make disaster insurance mandatory among households and small and medium enterprises (SMEs).

“I am strongly endorsing it. We hope that the President will sign an executive order because it will take time to get a legislation enacted for this purpose,” he said.

The proposal is under study by the Department of Finance (DOF).

Nestor Espenilla, Jr., Bangko Sentral ng Pilipinas (BSP) deputy governor, said government is considering an online delivery channel to further improve insurance penetration in the country.

“Here there are many other kinds of financial institutions (aside from insurance agents) like banks and pawnshops. Pawnshops are the leading distribution channels for insurance and they are able to do that under regulatory changes that have been facilitated through the BSP,” he said.

Espenilla said the proposed National Retail Payment System (NRPS) will allow the transfer of funds from one account to another account easy, convenient and affordable anywhere in the country.

Consultations on the NRPS are ongoing, including discussions on cross-network ATM withdrawals and how to move from one e-money product to another e-money product.

Espenilla said a specific work program is being hammered out parallel to a study on governance rules.
“The idea is to create a system that is largely self-governed by the players because it is potentially inefficient if the government or regulator calls the shots as it can be an impediment to innovation,” he said.