Developing an inclusive policy on Microinsurance Regulation: The Kasagana-ka MBA experience


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This presentation was delivered by Ms Maria Anna Ignacio (Executive Director at KDCI/ KMBA, The Philippines) at the ICMIF-AOA Development Network Seminar (18-20 September 2013; Manila, The Philippines)

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Developing an inclusive policy on Microinsurance Regulation: The Kasagana-ka MBA experience

  1. 1. Developing an inclusive policy on Microinsurance regulation: A Case Study of the Philippines
  2. 2. Malinaw at nakasulatangmgapaniniwala, patakaran, proseso, targets, i naasahan Partners: paglalambatngmgaugnayansai banginstitusyon/ grupoupangmakapagbiigayng maramingserbisyo. KASAGANA-KA: Kabuhayan Tungo sa Ganap na Kasarinlan By 2016, urban poor communities in 30 field sites have vibrant social and economic infrastructures supportive of livelihood enterprises and social protection services.PHOTOSKDCI in 2016 - Framework - English edited.pdf VISION Philippine urban poor communities thriving amid vibrant social and economic infrastructures reflecting the members’ adequate livelihood activities, inclusive development opportunities, support for each other, and value for human rights. MISSION A social development organization upholding service as its core business and delivering hope, guidance, and opportunities in improving the social and economic well-being of urban poor women, along with their families and their communities Pledge of Commitment to KASAGANA-KA In the presence of my fellow members and peers, and in the name of my family, I Pledge that to give my best in becoming and being a worthy and exemplary member of Kasagana-Ka To be diligent in performing all my tasks, To be persevering in reaching my and my group’s goals, To be a prudent and trustworthy steward of my and others’ wealth, To be sympathetic to those who are in need, To be helpful and caring of others at all times, And above all, to be faithful and true to myself, to my family, and to my fellow members So help me God. STRATEGY Microfinance is the main vehicle through which the niche market (urban poor women) is reached and offered bundled services, which are constantly being improved and expanded as a result of organizational development, consortium- building, and networking with other stakeholders Client- Beneficiary Her Family Our Mother- Client’s Community Structures Systems Skills and Expertise Values Resources Effective and Efficient Organization Sufficient Resources, Skills, and Development of Core Values The client-beneficiary undergoes personal development— improving her self-confidence, deciding for herself, and becoming empowered. Community members areactively engaged in investing in the improvement of their well-being and quality of life through their flourishing economic enterprises, sufficient social protection and services, and satisfactory peace and order. Mother-client’s family is healthy, happy, and harmonious The structures and systems ensure that programs, products, and services reach the client- beneficiaries in the most creative, effective, and efficient manner. The structures and systems are functioning well, resulting in an organization that is cohesive and harmonious. Vision- mission, strategy, objectives, targets, core values, policies, and processes are discussed, clear, owned, and written up. There are clear metrics for selection and performance in all levels of the organization (board, employees, client- beneficiaries, andpartners) Financial Status: Resources are sufficient for the implementation of programs and delivery of services Skills and expertise of the employees are honed and developed Other Resources are adequate (hardware, software, spac e, materials) and being used optimally The resources of her family are adequate for the members’ needs (food, education, housing, health, and security) Partners: Networking is pursued so that programs, products, and services are improved and expanded Commitment to the organization and its client-beneficiaries is developed, along with dedication to service to the disadvantaged Welfare and economic situation of employees are also improving
  4. 4.  Basic Life Insurance Plan  Credit Life Insurance Plan  K-Kalinga Accidental Life Insurance with Fire Assistance (underwritten by Bankers Assurance-MalayanGroup)
  5. 5. Study & Set-up 2005 Survey of members 2006 Actuarial study, SEC registration 2007 Lobbied and received IC license Learning Phase 2008 Increased in MFI CBs due to insurance program 2009 Cleaned database of inactive members Partnering Phase 2010 Development of consortium strategy 2011 New mgt Leaders; full implementation of consortium strategy New Products Phase 2012 CLIP implementation and tie-up with private insurer 2013 Product review and development
  6. 6. Operations Highlights (As of June 2013) Total Members 36,114 or 140,000 lives Premium Contribution Php 81,270,631.10 Total Assets Php 80,349,027.44 Retirement Fund Php 16,850,971.62 Total Claims Paid Php 11,226,599.39 Number of Claims 935 (372 members; 563 dependents)
  7. 7. 2006 2007 2008 2009 2010 2011 2012 Active Clients 8,544 11,099 15,083 15,537 17,800 18,370 20,119 0 5,000 10,000 15,000 20,000 25,000 KDCI Active Client-Beneficiaries K-MBA Members 12,237 21,358 17,037 17,802 24,152 35,719
  8. 8. 2007 2008 2009 2010 2011 2012 Number of Members 12,237 21,358 17,037 17,802 24,152 35,719 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 Number of K-MBA Members Decrease due to data clean-up Consortium/Associate Members 0 0 0 0 4,416 11,210
  9. 9. 0 50 100 150 200 250 2007 2008 2009 2010 2011 2012 Number of Claims (Aggregate) 0 50 100 150 2007 2008 2009 2010 2011 2012 Member Dependent
  10. 10. Indicators As of Sept 2012 1. Solvency Ratio (Standard: > 120%) 139.72%  2. Return on Equity (Standard: > 0) 9.03%  3. Return on Net Premium (Standard: > 0) 14.61%  3. OPEX (Standard: <20%) 21.30%  4. Retention Rate (Standard: > 70%) 80.81%  5. Participation Rate (Standard: > 90%) 105.65%  6. Payout Ratio (Standard: < 25%) 15.20%  7. Growth Rate 132.87%  8.Time to Payout (Standard: 1-3-5) 99.00% 
  11. 11. KDCI Microfinance provides the social infrastructure K-MBA Social Protection thru insurance Other Services: K- EEPF Other Services with Partners in Health Other Services with Partners in Government Dependent yet Distinct and Autonomous Financially Sustainable Socially Responsible
  12. 12. towards inclusion...not suppression...not alienation
  13. 13.  Challenging the Limits ofWhat Is  What is the appropriate accounting system to measure the double bottom line? New metrics?  There has already been forward movements in the discourse on microfinance yet the principles and definitions have not permeated existing and newly introduced rules and regulations.  MFI-MBAs are not simply insurance providers; the push for more benefits to its members
  14. 14. Assessment of Microinsurance as Emerging Microfinance Service for the Poor:The Case of the Philippines Asian Development Bank 2013 ...there is a need to come up with more defined rules and regulations for the operations of microinsurance MBAs.This is to ensure standardization of operations and practices for prudential purposes. Such rules should be able to address (i) protection of members, (ii) fit and proper rule for MBA governance, (iii) prudential requirements, and (iv) market conduct guidelines. standardization towards prudential purposes some quotes from...
  15. 15.  Challenging the Limits ofWhat Is  Standardization should also allow for the differences in the size of MBAs and its mother organization, the MFIs.  Risk-based supervision is most welcome; appreciate it from the perspective of the clients, visit our centers
  16. 16.  GettingOur ActTogether  Translation and Implementation Difficulties – agency heads as champions of the inclusion agenda but staff fail to translate and implement  Government agencies need better coordination, the case of SEC and the DOF-NCC  Shared terminologies, definitions, principles  One-stop mechanism for MFIs-MBAs
  17. 17. Assessment of Microinsurance as Emerging Microfinance Service for the Poor:The Case of the Philippines Asian Development Bank 2013 Establish an appropriate enabling policy and regulatory environment Government should own and champion the reform measures...ensure that concerned government agencies (e.g., DOF– NCC, Insurance Commission) are convinced of and own the policy and regulatory reform agenda. government should own and champion its reform agenda some quotes from...
  18. 18.  Beyond Good and Right,The Call for Magis  Continuing education of partners and clients  Continuing learning and improvements in MFI and MBA systems and processes  Stewards of resources: weighing priorities and not losing sight of higher values and goals
  19. 19. Assessment of Microinsurance as Emerging Microfinance Service for the Poor:The Case of the Philippines Asian Development Bank 2013 The availability and use of technology (e.g., mobile phones, chip cards, and netware) and technology-based solutions to bring down costs, improve product value to policyholder, and cover more microinsurance clients provide great potential for increasing microinsurance reach. affordable and helpful technology? some quotes from...
  20. 20.  When Prudence Kills Innovation and Compassion  The very strength of smaller organizations is its quickness to innovate and be close to its clients; the challenge to maintain its strength in the midst of the call for more complexity and sophistication  Those who follow the regulations are the conscientious ones while those under the radar gets away...
  21. 21. Assessment of Microinsurance as Emerging Microfinance Service for the Poor:The Case of the Philippines Asian Development Bank 2013 Unfortunately, both the SEC and the CDA26 have not yet come up with supervisory mechanisms that will enable them to determine when an entity under its jurisdiction is engaged in informal insurance schemes. Also, while the circulars clearly provide for sanctions, the operational mechanisms by which such sanctions shall be implemented are yet to be established within the relevant regulatory agencies... supervisory mechanisms? operational mechanisms within relevant regulatory agencies? some quotes from...
  22. 22. Funds management Dealing with regulatory bodies and other government agencies Governance and stewardship
  23. 23.  Network as shared-service provider  Development of standard metrics  Benchmarking as a tool for continuing development (local and international)  Partnerships with public and private business sector
  24. 24.  Retirees as resource pool of experts and advisers  Children of members as successor generation  Development of diploma and certificate courses needed for MBA- MI
  25. 25.  Proper Selection of Leaders and Managers  Rooted in Service and Stewardship  Regular training and formation (in- house and from the network)  Formal sessions  Mentoring  Exposure, exchanges  Conferences
  26. 26.  Volunteer-Experts  Partnerships and networking  academe  NGO networks  Government agencies  Business groups
  27. 27. The members of the Board of Trustees of Kasagana-ka MUTUAL BENEFIT ASSOCIATION Thank you for your attention