CARD MBA: Experience on Life Insurance Product and its Viability

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Presentation made during the ICMIF Development Network Seminar in Kenya 2009.

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CARD MBA: Experience on Life Insurance Product and its Viability

  1. 1. CARD MBA <ul><li>Experience on Life Insurance </li></ul><ul><li>Product and its Viability </li></ul><ul><li>By </li></ul><ul><li>Dr. Jaime Aristotle B. Alip, CARD MRI Founder and Managing Director </li></ul><ul><li>Vener S. Abellera, CARD MBA Assistant General Manager </li></ul>ICMF Development Workshop Nairobi, Kenya July 6 th to 8 th 2009
  2. 2. &quot;Mga Institusyon sa Iisang Misyon&quot; 2006 CARD MUTUALLY REINFORCING INSTITUTIONS (CARD MRI) as ONE 2007 2005 1999 1997 1986
  3. 3. Geographical presence of CARD MRI Partnership Program in Hongkong since 2007 777 Branches and Offices all over the Philippines since1986 Partnership Program in Indonesia since February 2008 First International NGO Office in Cambodia since 2006 Partnership Program with TYM in Vietnam since 2005
  4. 5. CARD MBA Bldg. Colago Ave., San Pablo City 4000 C ENTER FOR A GRICULTURE and R URAL D EVELOPMENT M UTUAL B ENEFIT A SSOCIATION, Inc. CARD MBA stands for ….
  5. 6. Automatic Membership to CARD MBA
  6. 7. Year 1994 Members Mutual Fund (MMF) was established by CARD, Inc. for loan redemption in case of death of member-borrowers. Brief History CARD Mutual Benefit Association, Inc. Contribution: 1.0% of the principal amount of loan. Only loans above Php 10,000.00 are covered. The Fund was under the custody and being managed by CARD, Inc. Benefit: Upon death of member-borrower, CARD will pay the balance of the loan.
  7. 8. Year 1994 <ul><li>CARD offered basic life insurance program </li></ul>Year 1997 <ul><li>CARD offered a monthly pension. </li></ul>Brief History CARD Mutual Benefit Association, Inc. Contribution: Php 2.00 weekly Benefit: Php 2 k – less than 2 years as member Php 5 k – more than 2 years as member Contribution: Php 2.50 weekly contribution Benefit: Php 300 – 600.00 monthly pension for life after member’s 65th birthday
  8. 9. All throughout those years, CARD’s in-house microinsurance program has no actuarial assessment and analysis. Year 1998 Brief History CARD Mutual Benefit Association, Inc. CARD also realized that the institution was at risk because CARD was responsible for pension payment. And fulfilling its obligation to members would DECAPITALIZE CARD leading to potential bankruptcy. When the assessment was done, CARD realized that a member would contribute for two years just to cover one month of pension benefit.
  9. 10. Year 1999 <ul><li>On October 29, 1999, it was registered with Securities and Exchange Commission (SEC) as non-stock, non-profit entity owned and managed by the members. </li></ul><ul><li>License from the Insurance Commission was released on May 22, 2001. </li></ul>Brief History CARD Mutual Benefit Association, Inc. Early 1999, there was an information campaign for the transformation of MMF into a formal microinsurance program thru MBA There was actuarial assessment and analysis done in the existing products and services. On September 9, 1999, CARD MBA was born to manage MMF.
  10. 11. CARD MBA’s VISION, MISSION, PRODUCTS & SERVICES
  11. 12. CARD MBA has SHARED VISION with CARD MRI C F I S H E S
  12. 13. CARD MRI’s VISION CARD MRI is the global leader in the microfinance industry owned and led by members upholding the core values of : C ompetence F amily spirit I ntegrity S implicity H umility E xcellence and S tewardship Shared Vision…… CARD Mutual Benefit Associations, Inc.
  13. 14. CARD MBA is a mutual benefit association formed: Mission Statement…… CARD Mutual Benefit Association, Inc. to promote the welfare of marginalized women; <ul><li>and to actively involve its members in the direct management of the Association including formulation and implementation of policies and procedures geared towards sustainability and improved services.  </li></ul><ul><li>to extend financial assistance to its members in the form of death benefits, medical subsidy, pension/ retirement savings and loan redemption. </li></ul>
  14. 15. Products of CARD MBA LIFE INSURANCE PROGRAM with TOTAL & PERMANENT DISABILITY, ACCIDENTAL DEATH and MOTOR VEHICLE ACCIDENTAL HOSPITALIZATION (MVAH) BENEFITS ALL LOANS INSURANCE PACKAGE (modified Loan Redemption Fund) with Automatic Loan Offsetting After Disability (Auto-LOAD) RETIREMENT SAVINGS FUND REFUND OF CONTRIBUTIONS
  15. 16. Member’s Legal Dependents covered by Life Insurance <ul><li>If the member is married: </li></ul><ul><li> 1.1. Her legal spouse </li></ul><ul><li> 1.2. All her biological children and/or adopted children, single, 14 days old (2 weeks) but not more than 21 years old; </li></ul><ul><li> 1.3. All her biological children and/or adopted children, single, </li></ul><ul><li>more than 21 years old disabled and incapacitated to work. </li></ul>2. If the member is single (unmarried) without children: 2.1. Her biological parents more than 60 years old. 3. If the member is single (unmarried) with children: 3.1. Her biological and/or adopted children as stated in 1.2 and 1.3 and not her biological parents. Life Insurance Program … CARD Mutual Benefit Association, Inc.
  16. 18. <ul><li>Rider of Life Insurance Benefi ts </li></ul><ul><li>Total and Permanent Disability </li></ul><ul><li>Amount of benefits of TPD is base on the amount of Life insurance of the member </li></ul><ul><li>Motor Vehicle accidental Hospitalization (MVAH) Benefits </li></ul><ul><li>AMOUNT OF BENEFIT: Maximum of Php 10,000.00 </li></ul><ul><li>base on hospital billing. </li></ul>
  17. 19. Life Insurance Premiums >> Php 15.00 or 31 cents dollar but can be given a maximum benefits of Php 100,000 or $ 2,127.66.
  18. 20. <ul><li>Collection of member’s contribution is thru the network of CARD MRI as of April 30, 2009: </li></ul><ul><li>- 37 Branches with 717 Units/OBOS </li></ul><ul><li>- seven (7) BOAT partners </li></ul><ul><li>- 14 CARD MBA Provincial Offices </li></ul>EFFECTIVE COLLECTION MECHANISM <ul><li>Compulsory Weekly contributions of Php 15.00 for Life Insurance and Php 5.00 for Retirement </li></ul><ul><li>Voluntary Php 25.00 weekly for PhilHealth </li></ul><ul><li>Voluntary Php 50.00 weekly for health insurance </li></ul><ul><li>1.5% per annum of the loan amount for LRF </li></ul>AFFORDABLE CONTRIBUTION <ul><li>Can give equal benefits to members being members- owned association </li></ul><ul><li>Members can easily understand their benefits out of their weekly contributions </li></ul>LEVEL CONTRIBUTIONS LEVEL BENEFITS <ul><li>781,902 household-members as of 04-30-09 (CARD Rural Bank’s savers not included) </li></ul><ul><li>Compulsory life insurance and retirement coverage to prevent adverse selection. </li></ul>LARGE MEMBERSHIP BASE VALUE ADDED / STRATEGY KEY SUCCESS FACTOR KEY SUCCESS FACTORS ... … CARD Mutual Benefit Association, Inc.
  19. 21. <ul><li>Prevent co-variant risk </li></ul><ul><li>Able to observe proper product costing </li></ul><ul><li>Able to develop insurance culture </li></ul><ul><li>Business-like/ professional relationship among different institutions of CARD MRI </li></ul>SEPARATE INSTITUTION TO HANDLE MICROINSURANCE OPERATION <ul><li>I.E.C. is through CARD MBA Provincial Offices with the assistance coming from CARD branches. </li></ul><ul><li>MBA Coordinators, who are members elected by their co-members, assist in the I.E.C. </li></ul>EFFECTIVE Information, Education Campaign (I.E.C.) STRATEGIES <ul><li>Claims settlement is on the CARD branch/Prov’l Office level with the assistance of the Center Officers and MBA Coordinators. </li></ul><ul><li>1-3-5-day target for claim’s settlement </li></ul>EARLY SETTLEMENT OF CLAIMS <ul><li>2 % of gross contribution is paid to the branches as collection expense </li></ul><ul><li>12% of the gross contribution are allotted to GAF but the actual usage is less than11% only. </li></ul>LOW ADMIN COST VALUE ADDED / STRATEGY KEY SUCCESS FACTOR KEY SUCCESS FACTORS ... … CARD Mutual Benefit Association, Inc.
  20. 22. Yearly Membership, Claims Payment & Total Assets as of May 31, 2009 CARD Mutual Benefit Association, Inc. 1,420.509 350.251 347.761 54.480 805,978 2009 1,168.190 274.118 249.461 101.912 687,934 2008 671.532 382.861 243.453 180.855 130.823 70.200 28.072 13.824 6.608 TOTAL ASSETS (Php 000) 197.077 147.549 61.616 469,457 2007 CUMULATIVE YTD 105.863 85.933 30.901 247,850 2006 77.904 55.032 15.505 144,499 2005 61.052 39.527 14.886 112,174 2004 46.015 24.641 10.940 116,395 2003 24.177 13.701 6.896 69,223 2002 11.436 6.805 3.386 49,887 2001 9.473 3.419 2.445 35,704 2000 6.596 0.974 0.974 28,531 1999 FUND BALANCE (Php 000) CLAIMS PAYMENT (Php 000) MEMBERSHIP YEAR
  21. 23. 2007 2006 2005 1986 1997 2007 1999
  22. 24. 2007 2006 2005 1986 1997 2007 1999
  23. 25. THANK YOU... SALAMAT PO ! PEACE… KAPAYAPAAN… SALAM

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