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Microinsurance in the Philippines : Policy and Regulatory Issues and Challenges

Author

Listed:
  • Gilbert M. Llanto

    (PIDS)

  • Joselito Almario
  • Marinella Gilda Llanto-Gamboa

Abstract

This study assesses the state of micro-insurance in the country, identifies the players and their performance, and the challenges facing micro-insurance development. The term micro pertains to the capacity of a program to handle the small, sometime irregular cash flows of poor households, who have been excluded in the commercial insurance system for a variety of reasons. Micro-insurance products, specifically designed with the poor in mind, will help mitigate risks and reduce the vulnerability of poor households. The most prominent forms of micro-insurance are life insurance and health insurance (carried out as part of an overall health care package that links the health insurance to a health facility), which have been designed to be responsive to the need of poor households. The paper reports 17 players in the emerging micro-insurance industry, consisting of 12 cooperatives, three NGOs/MFIs, and two transport associations that are offering home-made micro-insurance. These home-made microinsurance products continue to be provided despite their actuarial weaknesses and lack of financial capacity of the providers because of very strong demand from their membership for such financial products. Given their advantages over commercial insurance companies, the mutual benefit associations (MBAs) are the usual vehicles of micro-insurance programs. In 2004, 18 MBAs were registered with the Insurance Commission (IC) with accumulated assets of PhP14.8 billion. Members equity totaled PhP4.25 billion. The paper calls attention to the institutional, policy and regulatory issues and challenges facing micro-insurance.

Suggested Citation

  • Gilbert M. Llanto & Joselito Almario & Marinella Gilda Llanto-Gamboa, 2006. "Microinsurance in the Philippines : Policy and Regulatory Issues and Challenges," Development Economics Working Papers 22649, East Asian Bureau of Economic Research.
    • Handle: RePEc:eab:develo:22649
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    References listed on IDEAS

    as
    1. Jeffrey R. Brown & Amy Finkelstein, 2004. "Supply or Demand: Why is the Market for Long-Term Care Insurance So Small?," NBER Working Papers 10782, National Bureau of Economic Research, Inc.
    2. Siegel, Paul B. & Alwang, Jeffrey & Canagarajah, Sudharshan, 2001. "Viewing microinsurance as a social risk management instrument," Social Protection Discussion Papers and Notes 23305, The World Bank.
    3. Brown, Jeffrey R. & Finkelstein, Amy, 2007. "Why is the market for long-term care insurance so small?," Journal of Public Economics, Elsevier, vol. 91(10), pages 1967-1991, November.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    micro-insurance; risk protection services; insurance industry; life insurance; mutual benefit associations; social protection; micro-finance institutions; micro-insurance delivery;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • G20 - Financial Economics - - Financial Institutions and Services - - - General

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