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MEFIN_Microinsurance through Rural Banks

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MEFIN_Microinsurance through Rural Banks

  1. 1. A presentation for MEFIN July 14, 2016 Partner-Agent Model: Country Builders Bank
  2. 2. Discussion Framework  Background – Rural Bank Industry  Evolution of Microinsurance in Rural Banks  Landmark regulatory policies for microinsurance  RBAP Strategy and Milestones  The Case of Country Builders Bank
  3. 3. Rural Banks in the Philippines Rural Banking Act of 1952 The RBAP was founded in 1955 by 18 rural banks Rural Banks Act of 1992 Consolida tion program for rural banks began in 2010 Republic Act 10574 or the “Foreign Equity Bill” 490 rural banks as of April 2016 18 rural banks established The number of RBs peaked at 711
  4. 4. The Rural Bankers Association of the Philippines Rural Bankers Association of the Philippines (RBAP) Rural Bankers Research and Development Foundation, Inc. (RBRDFI) Luzon Federations Visayas Federations Mindanao Federations Member–Rural Banks
  5. 5. Loan Redemption Insurance or Credit Life (to guarantee loans) Mutual Mortuary Fund (to offer value- added services) Group Term Life Insurance (to increase regulatory compliance) MI Agent / Broker License (to be more responsible and effective) Loans and Deposits (to provide financial services to farmers, fisherfolks and entrepreneurs) INFORMAL FORMAL
  6. 6. The General Banking Act prohibits banks to engage in insurance business as the insurer Insurance law requires that a license be obtained as an agent or broker in order to solicit applications for insurance and receive commission or other compensation
  7. 7. DEPARTMENT OF FINANCE (DOF) National Regulatory Framework for Microinsurance 2010 Joint IC-CDA-SEC Circ. 01-2010 (Informal Microinsurance) Joint IC-CDA-SEC Circ. 02-2010 (Treatment of Informal MI Funds) INSURANCE COMMISSION Insurance Memo Circular 1-2010 (Regulations for the Provision of MI Products & Services) Insurance Memo Circular 06-2011 (Guidelines for the Approval of MI Training Programs and MI Licensing of Agents) BANGKO SENTRAL NG PILIPINAS BSP Circular 683-2010 (Marketing, Sale & Servicing of Microinsurance) BSP Memo 15-2011 Reminder on the Proper Offering of Microinsurance BSP Memo 27-2011 Guidance on the Implementation of 683-2010 (redefintiion of “microfinance clients”)
  8. 8. 1 - Partner with commercial insurance companies for IC approved products either under a group or individual policy 2 - Establish membership to an IC authorized cooperative insurance provider or Mutual Benefit Association (MBA) 3 - Gain IC authorization as an insurance provider: (a) life or non-life insurance company, (b) coop insurance provider or (c) Mutual Benefit Association (MBA)
  9. 9. Insurance Memo Circular 1-2010 Section 6.4. Microfinance institutions engaged in microfinance operations may apply and be licensed as microinsurance agent provided that: 6.4.1 A soliciting agent is identified by the institution 6.4.2 The institution sells microinsurance products only to its microfinance clients
  10. 10. Insurance Memo Circular 6-2011  Microfinance institutions like bank and non-governmental organizations applying for a microinsurance agent’s license shall REFLECT IN THE PRIMARY OR SECONDARY PURPOSE TO ACT AS A MICROINSURANCE AGENT.  A microfinance institution licensed as a microinsurance agent shall display prominently in its premises a supplementary signage with the wordings “A Licensed Microinsurance Agent”
  11. 11. Marketing, Sale and Servicing of Microinsurance Products • A rural, cooperative, or thrift bank, including its authorized branch/es, extension office/s and other banking offices (OBOS) can: – present, market and sell microinsurance products as a “financial product of an allied undertaking” (under GBL, Section 20) – service (i.e. collect premiums and pay claims) microinsurance products as collection and payment agents (under GBL, Section 53.3)
  12. 12. All organic documents, informational and promotional materials used for microinsurance shall: • Prominently display the name of the issuing insurance provider/partner • State the clause: “The insurance product/s of (name of issuing insurance provider ) is/are not insured by the Philippine Deposit Insurance Corporation and is/are not guaranteed by the (name of the bank).”
  13. 13. Rural Bankers Association of the Philippines (RBAP) Rural Bankers Research and Development Foundation, Inc. (RBRDFI) TECHNICAL ASSISTANCE TRAINING LICENSING Member–Rural Banks Funding Support Technical Assistance RBAP’S Strategy for Microinsurance
  14. 14. Microinsurance Agent Training for RBs 2days Basic Microinsurance Training (with qualifying exam) By RBAP-RBRDFI 1day 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
  15. 15. Credit Life Death Benefits for the principal and dependents Hospitalization or illness benefits Coverage for Calamities/ Catastrophic events Mobile phone-based premium payment & claim settlement Deposit-linked insurance
  16. 16. Licensed Insurers RURAL BANK Microfinance clients IntermediaryInsurer / Risk-carrier Insurance The Partner-Agent Model
  17. 17. Product Enhance ment Compliance to Regulations Risk- Transfer via Partner- Agent Model 51 rural banks with microinsurance agents license
  18. 18. 0 200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Principal 179,810 216,089 295,872 331,608 495,424 556,147 584,659 612,024 663,832 Dependents 363,698 433,425 638,558 704,657 880,252 952,391 992,274 1,182,1941,277,012 Client Data: Principals and Dependents
  19. 19.  Microinsurance as a compulsory product Example: Microinsurance tied up with loan such  Offer microinsurance as an additional product (voluntary) Example: Add-on to a micro-savings account Option to increase coverage and/or benefits in exchange of additional premium Modes of Microinsurance Delivery
  20. 20. MICRO-BORROWERS MICRO-DEPOSITORS  EXISTING CLIENTS OF THE BANK WHOSE ANNUAL HOUSEHOLD INCOME IS NOT MORE THAN Php 206,000 (approx. USD 4,400) TARGET MARKET
  21. 21. Success Stories “Microinsurance lowers the risk of non-payment of loan in case the clients experience misfortune from a loss of a family member or their own death. Furthermore, clients manage to stay in the program because of the benefit they get from MI, thus helping RBGI achieve client retention. In fact, drop-out rates lowered to 15% (45% in 2011 to 30% in 2012).” RURAL BANK OF GUINOBATAN Guinobatan, Albay
  22. 22. RANG-AY BANK San Fernando, La Union “In less than a year since the product was launched in March 2012, Rang-ay bank has already enrolled a total of 3,057 borrowers and depositors and 97 of its employees to their MI program.”
  23. 23. COUNTRY BUILDERS BANK Manila “Since the MI product launching last September 10, 2012, CBB had already enrolled 1,045 principal members and their dependents and the number is still rapidly growing.”
  24. 24. Country Builders Bank: Microinsurance Experience Completed the microinsurance training in July 2011 Obtained microinsurance agent license in January 2012 Granted authorization from the Bangko Sentral in February 2012 Completed the amendment of its Articles of Incorporation in September 2012
  25. 25. THANK YOU! Ghay Mapano Project Coordinator (02) 527-2972/09082277343 gpmapano@yahoo.com

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