NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Thursday, February 19, 2015

The domestic insurance industry posted a stellar growth performance in the past year, registering an estimated 28 million Filipinos protected by microinsurance.

Microinsurance has proven to be a great tool in promoting affordable security in the Philippines with its significant contribution to the increase in insurance penetration, which hit 28 percent, one of the highest rates in the Asian region.

The recent calamities that shook the country highlighted the importance of having insurance protection, especially for the poor who are the most vulnerable. When Super Typhoon Yolanda struck the country in November 2013, over half a billion pesos in microinsurance claims were settled and given as benefits to families to cover calamity assistance for damaged crops, hospitalization and death.

Now that its wide-ranging impact is known, microinsurance is currently seen as an important component of risk management, complementing the government’s disaster prevention and rehabilitation program.

To support the industry’s growth, providers are encouraged to look into designing more products that will provide comprehensive coverage to the lives and livelihood of low-income people. One example of this is crop insurance offered by public insurance agencies in partnership with private providers.

There is a need to develop such products to cushion the effects on the low-income segment whose livelihoods and income sources are threatened when calamities strike. When such losses occur, the ability of an individual to bounce back from a calamity is severely affected, thus also affecting the productivity of their segment in the broader economy.