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PH now a role model for microinsurance, says AIR

The Philippines is now being emulated as a gold standard in microinsurance. And Asia Insurance Review (AIR) recently came up with an article showing four ways that helped the Philippines achieve this feat.

In an article published in its April 2022 issue, AIR interviewed the head of a Philippine microinsurance company who provided insights on how the country became a role model in providing insurance protection to underserved customers.

CARD Pioneer president and Microinsurance Network board chair Mr. Lorenzo Chan told AIR that four major factors contributed to the rise of microinsurance in the Philippines. And these were:

1. The shift from company-centric to customer-centric.

2. Focusing on genuine claims.

3. Innovative approaches.

And 4. Dealing with negative stereotypes.

According to Mr. Chan, the unprecedented growth of microinsurance in the Philippines can be credited to the shift of mindset from "company- centric" to "customer-centric".

“Rather than starting from our requirements which were originally crafted for the more traditionally affluent and corporate markets, we focused attention on the lower-income sector and what they needed,” he said.

The AIR article noted that microinsurance companies were mindful of the fact that insurance is still a product that needed to be sold and were well aware of the need to build trust and credibility with what was then a new market – the "micro" market.

To be able to do this, Insurance companies built partnerships with organizations that the mass or micro-markets patronized or were familiar with and trusted and these included microfinance institutions, rural banks, pawnshops, schools, NGOs and other types of retail outlets.

Mr. Chan added that a partnership required working together to determine the needs of the target market. He explained that customization was necessary for both products and services such as simplified enrolment and claims processing.

“Speedy and proper payment of claims is vital since claims settlement is ultimately the best articulation of the product’s value. While claims settlement sounds simple and straightforward, it is often a source of complaint,” Mr. Chan told AIR.

Innovation was also a key in the public's acceptance of microinsurance. According to Mr. Chan, bundling of products at an affordable price and committing to settling claims within five days were the major novelties that made microinsurance sellable. .

He added that to facilitate claims processing, the mobile ‘phone became the most convenient and effective tool for conducting interviews and validating claims by video.

However, despite the steady progress in covering an increasing number of people, Mr. Chan said there is still a long way to go given the size of the market.

He believes that there remains in some parts the negative stereotype of insurance as being expensive, too technical, hard to comprehend, quick to collect but slow to pay claims. And this is something microinsurance should address to sustain its growth.

Insurance Commission's data reveals that 50.35 million Filipinos were already covered by microinsurance as of 31 December 2020, an increase of 11.56 % from the previous 12 months. The life and non-life insurance sectors accounted for 29.19% and 13.29% of the total coverage, and microinsurance providers collected a total of PHP7.8 billion ($162.8 million) in premiums.


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