The Landscape of Microinsurance in Asia and Oceania 2013 study report bares the state of microinsurance in this region as "outstanding".
Over 100 microfinance and microinsurance providers, industry think-tank representatives, international financial inclusion experts and advocates met in Manila last week to engage in rounds of dialogues. The Microinsurance Learning Session Asia and Oceania: Implications of the Landscape Study was launched at Diamond Hotel, Roxas Boulevard, Manila, Philippines.
More than 170 million low-income individuals in the region have been covered by microinsurance between 2010 and 2012. This outreach is hardly comparable to the markets in Latin America and the Caribbean and in Africa where previous landscape studies documented microinsurance outreach not exceeding 46 million individuals for each continent.
His Excellency Thomas Ossowski, German Ambassador to the Philippines, speaking on the support of Germany towards development cooperation in the Philippines such as in financial inclusion, stated that the learning session can encourage experts to innovate and go through uncharted paths that need to be discovered to help low-income populations. "Innovation in insurance for the low-income will be a work in progress especially with an evolving ASEAN economic space," he added.
"With this first study on The Landscape of Microinsurance in Asia and Oceania published by the Munich Re Foundation and the GIZ-RFPI Asia program, the blank spots in Asia on the World Map of Microinsurance are now filled", stated Munich Re Foundation Vice-Chairman Dirk Reinhard.
He added that, "the study is the continuation and complementation of the first landmark study, The Landscape of Microinsurance in the World’s 100 Poorest Countries published in 2006, and its successor studies for Africa and for Latin America and the Caribbean."
Opportunities to raise coverage ratios
The key findings in the study revealed that although the number of people covered by microinsurance in Asia and Oceania is substantially higher, only 4.3% of the populations are covered, as compared to 4.4% in Africa and 7.6% in Latin America. India is ahead of other countries in terms of microinsurance outreach, with as much as 111.1 million individuals covered. However, the outreach only covers 9% of its population. Countries with higher coverage ratios are the Philippines at 20.6% and Thailand at 13.9%
In the 31 countries covered by the study, a total of 507 microinsurance products were identified. Life insurance is the flagship product with the highest recorded outreach both in terms of people covered (83.9 million) and number of policies enforced (33.8 million). Property insurance, meanwhile, has the lowest outreach, covering only 1% of the population.
Issues affecting the development of other microinsurance products, such as health, takaful and disaster risks were also brought up in separate plenaries. Presenting the preliminary results of a GIZ – Microinsurance Network study on post-Haiyan industry responses, GIZ RFPI Asia Program Director Dr. Antonis Malagardis, raised that while response delivery was hampered by logistic and coordination difficulties, an estimated 88,000 microinsurance claims have been paid. He added that, "close collaboration between the insurance companies and their partner intermediaries and the extensive branch or company network present on the ground were success factors in the timely response to microinsurance clients affected by the typhoon." Nearly 164 million people are affected annually by natural disasters in Asia, the study brought to the surface the need for specific disaster insurance in the region.
Session speakers from Philippine Insurance Commission, MicroEnsure and Cebuana Lhuillier Insurance Solutions, a pawnshop network, emphasized that the relaxation of claims requirements was a main consideration in their response to the typhoon victims. While the typhoon left the country with lingering tragedies, it has also benefited the microinsurance advocacy, with greater awareness and demand for calamity insurance.
Regulators as microinsurance champions
India and the Philippines are at the forefront of demonstrating that regulations are important in developing the sector. Regulators in other countries, such as Vietnam, Cambodia, Bangladesh, China, Indonesia, Pakistan and Sri Lanka are following suit and are in varying stages of either formulating or implementing their microinsurance-specific regulations.
Philippine Insurance Deputy Commissioner George Ferdinand Florendo stated that what the Philippines achieved with establishing the microinsurance framework is just the beginning. Florendo emphasized that institutionalizing the concept of inclusive growth and inclusive development will continue to be a dynamic process.
Other regulators from Indonesia, Nepal, and Mongolia also highlighted in their presentations that promoting insurance proportionality in regulation remains important as they support the microinsurance market development. Dialogue platforms such as Technical Working Groups, Technical Committees and Task Forces working on microinsurance are also crucial in bringing together regulators and industry players.
The discussants agreed that regulators need to champion market-based incentives such as leading insurance awareness, creating of alternative business segments and enabling the participation of innovative distribution channels.
Rallying multi-stakeholder collaboration for the way forward
While microinsurance in the region has its roots in community-initiated schemes, regulated commercial insurers currently lead the market’s progress. Other driving actors include non-government organizations, community-based organizations (CBOs), mutual and cooperatives. CBOs and other member-based organizations are the most commonly tapped distribution partners, enabling the delivery of 26% of the microinsurance products in the continent.
With the impending ASEAN financial integration in 2015, the respective strengths of the driving actors of microinsurance need to be harmonized. Mr. Aladdin Rillo, senior economist of Asian Development Bank Institute (ADBI), pointed out "to sustain the positive findings of the landscape study amidst the integration, regulatory compliance and market readiness need to be ensured in the ASEAN region". Therefore, multi-stakeholder collaboration and capacity-building are paramount.
"When we look at the landscape map, we see desserts and oases, where the latter are countries such as India and the Philippines. What’s needed is to drill down into the development of the oases – document the strategies and lessons - so donors can help the desserts learn from them," stated ILO – Microinsurance Innovation Facility Team Leader Craig Churchill.
Meanwhile, ADB Principal Financial Sector Specialist Arup Chatterjee expressed his views about moving forward on multi-stakeholders collaboration on microinsurance. Chatterjee declared that integrating microinsurance into broader policy and financial inclusion agenda is important to get the attention of policymakers.
Closing the two-day event, Department of Finance Undersecretary Gil Beltran addressed the participants on the importance of the landscape study and working together as a region. "We have to look at the landscape every now and then to find out whether there are gaps, overlaps, and see where ASEAN countries can complement, can cooperate, and coordinate. Because through coordination with each other, we can beat the competition. Only through harmonizing our rules, our practices can we avoid distortions to make our world a better place to live in."