WHY Microinsurance? Véronique Faber, Microinsurance Network

About the National Rural Support Programme Not for profit organization, established in 1991 Types of Products Offered: Loans, Micro-insurance, savings Other services: social mobilization, skills training, education, health, community infrastructure, Renewable energy Total disbursement: PKR. 63,994 m (US$ 680 m) 4.1 m loans Number of Active Borrowers: 0.42 million (52% women) Total No. of Active Savers: 2.19 million (52% women) Total No. of Persons Insured: 3.97 million (37% women) No. of active insurance clients: million (53% women) Number of Branches: 532 Geographical Dispersion: 56 Districts in 4 Provinces & Azad Kashmir

Incentives that motivated NRSP to offer Micro-insurance Product to its clients According to the Social protection in Pakistan survey conducted by the World Bank (PSNS II Oct, 2007)  54% of vulnerability for poor arise from hospitalization of one member of a family  43% of ultra poor respondents told that they had not recovered from shocks even after 3 years NRSP’s social mobilization process has revealed that support in “health” is a priority need identified by women members The government has set up a huge infrastructure for health which cannot cater to the needs of huge population

How were these products put in place? The product was launched in October 2005 in partnership with the Adamjee Insurance Company Product designed for the micro credit clients Premium Rs 100 (US $ 1.2) to cover self and spouse and benefits include  Rs 15,000 ( US $ 174.4) for hospitalization  Rs 15,000 ( US $ 174.4) for disability  Rs 15,000 ( US $ 174.4) for accidental death Rs. 5,000 Funeral charges in case of normal death Self Financing Scheme: For NRSP’s micro credit clients  The premium is paid as a part of the credit processing fee  Mandatory for all credit clients  Covers the credit client and his/her spouse

Source: Paperjam

Alalay sa Kaunlaran, Inc. (ASKI) ASKI Mutual Benefit Association (MBA) ASKI Foundation, Inc. Rimansi A network of professionally –managed Mutual Benefit Associations owned by the members that provide affordable, comprehensive, quality micro-insurance products and services to poor people in Asia and the Pacific

ASKI Insurance Commission Member - Death & TPD Php 120,000 (US$ ,000) ASKI MBA RIMANSI ASKI MBA 3 children - death Php 10,000 (US$ ) Spouse – Death Php 20,000 (US$ ) ASKI MBA

PH NETWORK OF MI-MBAS - 14 licensed MBA partners CARD MBA - Laguna RBT MBA- Misamis Or. ASKI MBA– Nueva Ecija KSK MBA – Q.C. Ad Jesum MBA – Davao Or. FICCO MBA - CDO SRCDC MBA - Bulacan CARE-Quezon Province PBC MBA - Agusan KCCDFI MBA – Zamboanga City SEDP MBA - Albay QPI MBA – Bacolod City PMPC MBA – Misamis Occ. KGI MBA - Zambales Pipeline: Serviamus Foundation

Outreach (2011) basic life credit life health MICROINSURAN CE PRODUCTS Membership: 1.85 M covering 7.24* M lives Contributions: USD 32.4 M (50% is refundable Equity Value) Claims paid: USD 8.23 M PHILIPPINES MIP members: 240,707 Premium: USD 104,647 Claims paid: USD 44,260 REST of ASIA and the PACIFIC *at least four (4) in a family is covered by the microinsurance certificate

For REDCAMIF, the main motivations to develop a Microinsurance Programs were: To satisfy the needs to mitigate and manage the risk of the clients businesses and households which generate a high vulnerability. Short-term (accidents, liquidity) and medium-term (household safety and health). To increase income through products diversification. To get comparative advantages by offering new products. To obtain client loyalty through the offer of products according to their needs. To implement an information system, allowing the processing of microinsurance commercialization and monitoring of the principal indicators for management decisions. To generate accurate information of different risks for clients and to develop new microinsurance products in the long-term. To identify best practices, knowledge, and mechanisms to integrate clients into the financial system. Additionally to develop new financial products which add value within MFIs affiliated to REDCAMIF. To strengthen the social enterprise image among the clients and the society

Goal and Purpose The main goal of the project is to reduce high vulnerability prevailing among the microenterprises and low income population. The main purpose is to create and to develop within REDCAMIF a sustainable business model for commercialization, and fostering the market relations between insurance companies and MFIs in the region. The microinsurance products were designed using the Regional Market Research. IndicatorGoalStatus MFI 2023 have expressed interest and been actively participating within the regional project Insurance companies offering microinsurance 613 have expressed interest and been actively participating within the project Total of microinsurance clients 225,000 Clients training in microinsurance 250,000 Number of microinsurance products 57 products validated for customers % of women clients50%63% of the clients are women

The seven products were developed in order to respond directly for the needs of clients and are oriented: LifeAccidentsHealth PRODUCTS Products demanded by the low income clients Microinsurance products Robbery: 73% Illness: 67% Transit accident: 60% Occupational accident: 54% Decease: 53% Domestic accident: 50% Risks to which they are exposed Insurance coverage demanded Payment capacity Life: 34% Health: 20.2% Burial expenses: 9.2% Family accidents: 8% US$ 1.00: 2% 1.00 – 1.90: 7% 2.00 – 2.90: 12% 3.00 – 3.90: 8% 4.00 – 4.90: 8% 5.00 – 7.40: 20% The studies were made based on variables such as gender, age, income level, geographic location, educational level, economic activity and others.

Learning Lessons No regrets but faced difficulties that include  NRSP was not a marketing company  Educating the clients about the product (linked with credit)  Claims process was cumbersome: Difficult for clients to complete required documentation (prescription and receipts)  Long list of exclusions  Re-imbursement rate very low in first five years  Timely payments to the clients (within 30 days)  Convincing the insurance company for including “Normal pregnancy” and “Day care”

Government issuances: + IMC No “Micro-insurance Regulation and Declaration of Policy Objectives” + Pres. Proc. No “Declaration of January as National Micro-insurance Month” + Regulatory Framework for Micro-insurance + National Strategy for Micro-insurance + Joint IC-CDA-SEC Memorandum Circular No “Defining Government’s Policy on Informal Insurance Activities” + IMC “Regulations for the Provision of Micro-insurance Products and Services” Learning Lessons Helping establish the legal framework

Learning Lessons The role of MFIs operating as marketing channels requires the design of a new and innovative business model. Standard microinsurance products to ensure volume and at the same time, flexibility according of several risks in each country. The Microinsurance Information System (SIIS by acronyms in Spanish) is very important as it connects the branches, national microfinance associations and insurance companies in one single network. Branches are the retail sales places. Regional Management level (market, negotiation, models, Information System). National management level (regulatory frameworks, promotion, financial education, operations). The sales scheme is based on the various methodologies of financial services (solidarity groups, Community Bank and others). The sales force is a selection of loan officers and one MFI officer for closure. Variety of products and demand segments, multi benefits.

Results Micro Insurance Programme is self sustainable and coverage gradually increasing Government sponsored social safety program for the poorest launched in selected districts  Premium as grant by the Government Rs 550 (US $ 6.3)/family (about 8 persons including unmarried adult daughter)  Cover Rs 25,000 ( US $ 290.6) per family member and covers the entire family Currently being implemented in KPK and Sindh Province in selected districts through Provincial RSPs and Adamjee The provincial Government provided financial assistance to meet the operational cost of the insurance scheme and also pay premium Households classified as “poor” as per Poverty Score Card are covered

Progress

Why Micro-insurance? Incentives and first results Fatima receiving treatment in flood affect areas of Punjab Zareena before treatment in a shrine (MI client in Sindh) Zarina during treatment in Private hospital (MI client in Sindh) CBO meeting in Bahawalpur Children receiving treatment in Sindh Micro Insurance clients of NRSP

Operational Highlights Covers 29 branches

PH Contributions, Claims ( ) (in USD) Contributions = M 81.97M 23.83M 11.84M Basic life insurance contributions (40.98 M (50%) is refundable Equity Value) Retirement Savings Fund (100% refundable + interest) Credit life insurance contributions M amount of claims paid PhP 1.00 B PhP M PhP 3.44 B PhP 4.94 B PhP M

Project Progress Projection: The program will start in the first semester of ActivityCurrent situation Diagnosis of regulatory framework in Central America and Panama Ended (2011) Operative and informatic diagnosisEnded (2011) Market research and insurance products designEnded vailidation stage Negotiation with regional insurances companiesNovember - December 2012 Design, develop and implementation of the Microinsurance Information System (SIIS) Development stage. Testing in Nov- Dic 2012 Definition of the institutional model for microinsurance commercialization Started in august 2012 Legal advice for negotiation process with insurance companiesStarted in august 2012 Financial educationContract sign in process Promotion and comunication campaignElaboration of Terms of reference in process

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