industry association of rural banks: strategic partner for developing access to microinsurance
DESCRIPTION
Ms. Ruth Aseron shares how the Rural Bankers Association of the Philippines leads to promote access to microinsurance for low-income clients in the countryside. This was presented during the 7th International Microinsurance Conference in 2011 in Rio de Janeiro, Brazil from Nov 8-10.TRANSCRIPT
RURAL BANKERS ASSOCIATION OF THE PHILIPPINES:
ENHANCING THE CAPACITY OF RURAL BANKSAS
MICROINSURANCE AGENTS
BY:
RUTH ASERONMicroinsurance CoordinatorRBAP-MABS
AGENDA Microinsurance in the Philippine context Philippine definition Common Microinsurance Products
Brief description of the Rural Bank Microinsurance Market Potential size Characteristics
Rural Banks as Microinsurance Agents Roles and Responsibilities of Rural Banks Advantages of RBs as MI Distribution Channels Lessons of Rural Bank MI Agents The RBAP response
Microinsurance: Philippine definition A financial product where: Premiums (computed daily) must not be more than 5% of minimum of non-
agricultural wage in Metro Manila, hence premiums cannot exceed PhP 20.20 per day (US$ 0.47 daily) or PhP 505.00 per month (US$ 11.60 monthly)
Guaranteed benefits are capped at no more than 500 times the same daily wage or at an annual maximum of PhP202,000 (US$ 4,700)
Contracts shall clearly state benefits and terms Easily understood by insured either in English or Filipino
Documentation requirements are “simple”
Collections coincide with cash flows
- MI National Regulatory Framework -
Minimum daily wage as of October 2010 is at PhP 404.00 or USD 9.40 and estimated workdays in a month is 25
Client base of 6 million
Rural Banks cover 85% of municipalities (mostly in rural areas)
Total branch/office network is 2,700
Total loan portfolio: PhP 98 Billion (US$ 2.3 B)
Deposit base: PhP 105 billion (US$ 2.6 B)
The Philippine Rural Banking Network
Size of the Rural Bank Micro- Market
Type of MF Accounts Number(as of December 2010)
Microfinance Loans Approximately 800,000
Micro-Deposits 4,941,445 (86%) **
Estimated Household Members 15,000,000
**Source: Philippine Deposit Insurance Corporation, December 2010
The Target Market of RB Microinsurance
Microfinance Borrower
Microfinance Depositor
Low-Income client of the Rural Bank
BSP Memorandum 027-2011 redefines “microfinance clients” to include any existing client classified by the bank as low-income or with an average annual household income of PhP206,000 or less (USD 4,745)
Rural Bank Microinsurance Team
Rural Bank(licensed as MI Agent)
Microfinance Supervisor
Marketing / Business
Development Manager
Compliance Officer
Microinsurance Soliciting Officer
Microinsurance Soliciting Officer
Sales Force(microfinance account officers / field staff)
RURAL BANKLICENSED
MICROINSURANCE AGENT
Client Education
Consumer Protection
Marketingof IC approved
MI Products
Servicing of premium
payments and claims
While the rural bank is a licensed agent of its microinsurance provider, its microfinance clients remain of prime importance.
Advantages of Rural Banks as MI Agents
Ability to capitalize on existing operational structure for cost-efficient MI sales and servicing
Compliance to both insurance and bank regulators increases their credibility as agents of MI products
Enhance clients’ access to other relevant financial products and services
Balanced recognition of MI as both a value-added client service & as a revenue-generating product
Lessons of Rural Banks as MI Agents
Onerous requirements and procedures make it difficult for rural banks to comply with insurance and bank regulations on their own
Challenge in comparing and deciding on the best insurance partners to work with
Need to educate bank staff & officers on microinsurance management and sales
Need for more market information
RBAP worked with the insurance and banking regulators to clarify rules and develop a turn-key approval process
RBAP acts as a “better services bureau” to assist banks in selecting and monitoring insurance partners
With the support of the USAID, ILO, and Insurance partners, RBAP was able to support a major nationwide training effort to educate bank personnel on microinsurance
Facilitate access to market information for regulators, rural banks and insurance providers through dialogues and technology-based feedback mechanisms
Challenges RBAP’s Response
Microinsurance Agent Training for RBs
2 da
ys Basic Microinsurance Training
(with qualifying exam)
By RBAP-RBRDFI
1 da
y
Product Mastery Training
By Partner-Insurer
• Fundamental Concepts and Principles of Insurance• Difference between traditional insurance and MICROinsurance• Regulations on MI sales, marketing and servicing of MI• Effective marketing of Microinsurance
• Microinsurance product features
• Special coverages and riders
• Standard policy provisions
• Proper Market conduct
• Claims settlement
The RBAP MI Training Course
Key Modules:1. Fundamental concepts and
principles of MI2. MI Regulations in the
Philippines3. Effective Marketing of MI
Training Approaches:40 % Lecture25 % Group Discussions35 % Games & Simulation
Exercises
GROUP DISCUSSIONS(RBAP MI Training Approaches)
Allows for sharing of field lessons and practical insights
Typically interactive and open
Employs Case Studies
Games & Simulation Activities(RBAP MI Training Approaches)
Understanding MI: Barangay Bigkis (localized
Treasure Pot game)
“Ang MI ay parang …” (Microinsurance is like)
Bahay-Buhay-Bagyo (“house-life-typhoon”)
Marketing & Selling MI: The Mystery Object D-I-G Tactic (Discover
Interests then Get solutions)
)
Results to Date (as of Oct)
# of Courses held 13
# of Banks Trained 157
# of Bank Staff Trained 297
# of Banks in Approval Process 45
# of Banks Approved as MI Agents
7
Compliance Process
TRAIN
In MI Basic + Product Mastery
REQUEST
For BSP No Objection
Notice
ASSEMBLE
your MI Team
CHOOSE
your partner well
SUBMIT
requirements to RBAP-RBRDFI
RBAP-RBRDFI coordinates submission of rural banks’ licensing requirements to the Insurance Commission and then the Bangko Sentral ng Pilipinas (BSP).
RBAP Microinsuranc
e Website
(Online Portal)
MI Website
“Find a MI Product”
Feature
MI Website
“Request Proposal”
Feature
Partnership Framework
Rural Bankers Association of the
Philippines (RBAP)
Rural Bankers Research and Development
Foundation, Inc. (RBRDFI)
Luzon Federation Visayas FederationMindanao Federation
Member–Rural Banks
Funding Support
Technical Assistance
