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.

1. RURAL BANKERS ASSOCIATION OF THE
PHILIPPINES:
ENHANCING THE CAPACITY OF RURAL BANKS
AS
MICROINSURANCE AGENTS
BY:
RUTH ASERON
Microinsurance Coordinator
RBAP-MABS

2. 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

3. 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

4. The Philippine Rural Banking Network
 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)

5. 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

6. 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)

7. Rural Bank Microinsurance Team
Rural Bank
(licensed as MI Agent)
Microinsurance Microinsurance
Soliciting Officer Soliciting Officer
Marketing /
Microfinance Business Compliance Officer
Supervisor Development
Manager
Sales Force
(microfinance account officers / field staff)

8. Servicing of
premium Client
payments and Education
claims RURAL BANK
LICENSED
MICROINSURANCE
AGENT
Marketing
Consumer
of IC approved Protection
MI Products
While the rural bank is a licensed agent of its microinsurance provider,
its microfinance clients remain of prime importance.

9. 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

10. Lessons of Rural Banks as MI Agents
Challenges RBAP’s Response
 Onerous requirements and  RBAP worked with the insurance and
procedures make it difficult for rural banking regulators to clarify rules and
banks to comply with insurance and develop a turn-key approval process
bank regulations on their own
 RBAP acts as a “better services
 Challenge in comparing and bureau” to assist banks in selecting and
deciding on the best insurance monitoring insurance partners
partners to work with
 With the support of the USAID, ILO,
and Insurance partners, RBAP was
 Need to educate bank staff & able to support a major nationwide
officers on microinsurance training effort to educate bank
management and sales personnel on microinsurance
 Need for more market information  Facilitate access to market information
for regulators, rural banks and
insurance providers through dialogues
and technology-based feedback
mechanisms

11. Microinsurance Agent Training for
RBs
2 days
1 day
Basic Microinsurance Product Mastery
Training Training
(with qualifying exam)
By RBAP-RBRDFI By Partner-Insurer
• Fundamental Concepts and • Microinsurance product
Principles of Insurance features
• Difference between traditional
• Special coverages and riders
insurance and MICROinsurance
• Regulations on MI sales, • Standard policy provisions
marketing and servicing of MI
• Proper Market conduct
• Effective marketing of
Microinsurance • Claims settlement

12. The RBAP MI Training Course
Key Modules:
1. Fundamental concepts and
principles of MI
2. MI Regulations in the
Philippines
3. Effective Marketing of MI
Training Approaches:
40 % Lecture
25 % Group Discussions
35 % Games & Simulation
Exercises

13. GROUP DISCUSSIONS
(RBAP MI Training Approaches)
 Allows for sharing of
field lessons and
practical insights
 Typically interactive and
open
 Employs Case Studies

14. 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)

15. Results to Date (as of Oct)
# of Courses held 13
# of Banks Trained 157
# of Bank Staff
297
Trained
# of Banks in
45
Approval Process
)
# of Banks
Approved as MI 7
Agents

16. Compliance Process
REQUEST ASSEMBLE CHOOSE SUBMIT
TRAIN
For BSP No requirements
In MI Basic + Objection your MI your to RBAP-
Product Mastery Team partner well
Notice RBRDFI
RBAP-RBRDFI coordinates submission of rural banks’ licensing requirements to the
Insurance Commission and then the Bangko Sentral ng Pilipinas (BSP).

17. RBAP
Microinsuranc
e Website
(Online Portal)

18. MI Website
“Find a MI
Product”
Feature

19. MI Website
“Request
Proposal”
Feature

20. Partnership Framework
Rural Bankers
Rural Bankers Research and
Association of the Development Funding Support
Philippines (RBAP) Foundation, Inc.
Technical (RBRDFI)
Assistance
Mindanao
Luzon Federation Visayas Federation Federation
Member–Rural Banks

21. RUTH ASERON
Microinsurance Coordinator
RBAP-MABS
microinsurance@rbapmabs.org
http://microinsurance.rbap.org