The Regulatory Framework Promotion of Pro-poor Insurance Markets in Asia (RFPI Asia) is a regional program that is funded by the BMZ (German Ministry for Economic Cooperation and Development) and being implemented by the Deutsche Gesellschaft für Internationale Zusammenarbeit GmbH (GIZ). The program seeks to improve access to insurance in the Asia by building the capacities for insurance regulation and supervision and by promoting the development of innovative insurance solutions for the low-income sector. RFPI Asia started in 2013 and has undergone three phases:
After ten years of implementation, the regional program will formally close in December 2022. To mark the formal end of RFPI Asia, a closing event was held on 14 October 2022 at the New Coast Hotel Manila with the theme “The RFPI Journey: Celebrating a Decade of Partnership and Cooperation for Developing Inclusive Insurance Markets in Asia”. The event was intended to showcase the accomplishments and contributions of RFPI Asia and its partners in developing inclusive markets for the vulnerable segments of society in the region. It was also intended to provide a glimpse into the challenges and opportunities in the inclusive insurance sector which partners and other stakeholders may want to explore through further collaboration among themselves and with German development assistance.
The event was conducted in a hybrid format to allow for more participation especially given the regional nature of RFPI Asia. As such aside from the in-person attendance of Philippine guests, key partners from Indonesia, Vietnam, Germany, Pakistan were able to virtually participate in the event. Likewise, a mini-exhibit participated in by the Insurance Commission (IC), the Philippine Insurers and Reinsurers Association (PIRA), and RFPI Asia was also set up in order to showcase the initiatives of key partners in the field of inclusive insurance. The Master of Ceremonies for the Closing Event was Mr. Jo-Dann Darong.
II. Welcome Remarks
After the Philippine and German national anthems were played, Mr. Darong introduced the first set of speakers to deliver the Welcome Remarks in the person of Dr. Bjoern Surborg, OIC Country Director of GIZ Manila and Deputy Commissioner Ferdinand George Florendo of the Insurance Commission.
Dr. Surborg formally welcomed the guests to the event and stated that it is indeed his pleasure to be part of the closing event of a program that has run for ten years. RFPI Asia has a very clear mandate in the sense it involves the development of insurance products for the poor and vulnerable sectors through the promotion of the processes of the program’s partners in the region, the Philippines included. Dr. Surborg explained that the implementation of RFPI Asia represents an evolution in the sense that in Phase One, it involved improving conditions for inclusive insurance in six countries; Phase Two focused on improving best practices in seven countries; and in Phase Three specifically concentrated on the effects of climate change through the development of regulations on climate and disaster risk insurance for poor and vulnerable households and MSMEs.
Dr. Surborg added that while the program has a lot of accomplishments, he would like to focus on three important areas. First is on financial inclusion where he believed the major achievement of the program was the establishment of the MEFIN network, a regional network composed of supervisors from seven countries whose first Chairperson happened to be Atty. Emmanuel Dooc who was then the Commissioner of the Insurance Commission. Dr. Surborg was very much pleased on how the network has done its role of helping insurance supervisors in the member countries. Second on private sector collaboration, RFPI Asia was able to establish five Public-Private Partnerships in a project supported by the Federal Ministry for Economic Cooperation and Development (BMZ). This is very important as public-private sectors collaboration will be a driver on many issues in the future. And third on climate change wherein the program was able to support the development of three new insurance products against the effects of climate change, an issue that will be carried forward in the future.
RFPI Asia was also an example on how GIZ works through technical cooperation wherein from the onset GIZ works closely with the partner institutions through development of systems and bring about change for the betterment of the lives of people in the countries where it operates. Dr. Surborg also took the opportunity to explain the evolution of GIZ itself. When RFPI Asia started ten years ago, GIZ worked primarily with the BMZ. Now GIZ works with other ministries from Germany and climate change is a focal area together with human rights, rule of law on behalf of the German Foreign Office.
To close his remarks, Dr. Surborg stated that while RFPI Asia is closing, its spirit and its achievements will be carried on into new projects like the Public Assets project in Vietnam, Agricultural Insurance in Indonesia and Vietnam, and an innovative initiative in the Philippines combining ecosystems-based measures combined with insurance solutions in order to adapt to the effects of climate change. He thanked the federal government, the BMZ, and all the RFPI Asia partners for being part of the journey of RFPI Asia in the last ten years and for joining the celebration of the accomplishments of the program.
Speaking on behalf of Commissioner Dennis Funa, Deputy Commissioner Florendo thanked RFPI Asia for inviting him to the closing event which he hoped would serve as a stage for discussions and exchange of information among the leaders of government and financial institutions who were present in the event. He also took the opportunity to thank RFPI Asia for being an unwavering partner of the Insurance Commission in promoting financial inclusion among Filipinos. He stated that there is a lot of work to do as far as financial inclusion is concerned especially among the poor but with the partnership between government and the private sector, this goal may not be far-fetched. While the Philippines is one of the fastest growing economies in Southeast Asia, poverty remains a perennial problem. In 2021, poverty incidence in the country was at eighteen percent which translates to around twenty million Filipinos living below the poverty threshold. While there has been a reduction in this figure for the past years, it cannot be looked past this number if the goal is to have an inclusive society for all. Deputy Commissioner Florendo added that many of the poor could not pull themselves out of poverty to due to untoward incidences such as sudden illness and death in the family which are further aggravated by loss or lack of livelihood and natural disasters.
Deputy Commissioner Florendo stated that most of the low-income households are in the rural areas and are dependent on farming, fishing and other livelihoods which are exposed various risks and unforeseen impediments caused by calamities. He mentioned the recent typhoon Noru or locally known as Karding which rammed the island of Luzon, leaving around three billion pesos of agriculture damage, twenty-three million pesos in infrastructure damages, and a death toll of twelve people. This is again a grim reminder of the vulnerability of a lot of Filipinos to the ravaging effects of calamities and acts of nature. Deputy Commissioner Florendo cited the importance of insurance in helping people re-build and recover from their loss, in particular, microinsurance which is designed to cater to the low-income and marginalized sectors by providing them benefits of insurance but at a more affordable and sustainable price. As of the first quarter of the year, forty-five million Filipinos have been covered my microinsurance; yet there is still a huge number of low-income households that needed to be reached out to. There are many ways to improve the people’s resiliency but Deputy Commissioner Florendo stressed that financial interventions like insurance and microinsurance programs could help individuals and families protect themselves from the risks and uncertainties they are exposed to. He added that financial literacy and awareness play a crucial role in poverty reduction by making them aware of the importance of managing their finances for planning their future. He assured that the work for a financially inclusive society will continue where no Filipino is left behind. The Deputy Commissioner hoped that RFPI Asia will continue to support this endeavor and he again thanked program for its contributions.
III. Keynote Addresses
Mr. Darong introduced the next segment of the event by citing how the power of collective efforts, synergistic initiatives, innovative solutions, and sustained partnerships were key to the sustainability of the RFPI Asia program over the last ten years. And to further expound on this theme, he called on Her Excellency, Ambassador Anke Reiffenstuel, and OIC Deputy Treasurer Eduardo Anthony Mariño to deliver their respective Keynote Addresses.
Ambassador Reiffenstuel informed the audience on how delighted she is to be part of the event and reminded her of her first encounter of the situation in the Philippines as then head of the Humanitarian Division. Floods, typhoons and other disasters seem to happen regularly and brings forth the concept of resilience which has become a daily part of the life of the people. It was indeed a learning experience for her and thus she is honored to be part of the Closing Event of RFPI Asia which is implemented by GIZ, a German organization which is an important stakeholder in addressing global challenges such as climate change and has been operating in the Philippines for more than 50 years.
The Ambassador added that RFPI Asia was the result of a G20 global initiative for creating access to insurance which was affirmed by ASEAN finance ministers. Based on the event theme, RFPI Asia in its ten years of existence has created a family and has become a household name in the field of inclusive insurance. Funded by the BMZ, it combines the important objectives of German cooperation and approach in the region by reducing poverty thru sustainable economic growth as well as adapting and mitigating the adverse effects of climate change.
Ambassador Reiffenstuel stated that the poverty in the region is still visible and the gap between the rich and poor is still there. She added that surveys over the past weeks affirmed this trend and we should take this trend as an encouragement for all stakeholders to continue cooperating beyond what has been achieved so far. The vulnerable sector spends most of its income on housing, food and do not have anything left to spend on insurance. The Ambassador further added that in the last ten years, the effects of climate change has likewise become more visible with droughts, flooding, and other natural disasters becoming more frequent. Late in 2021, typhoon Odette claimed the lives of more than four hundred people and caused damages of more than eight hundred million US dollars. She informed that audience that the IOM and other agencies supported by the German government just concluded projects related to typhoon Odette when typhoon Karding hit only a few weeks ago. Specifically, farmers and fisherfolks who are the most vulnerable sectors of the Philippine society are the most vulnerable and most affected with such disasters with their homes and livelihoods washed away due to flooding and landslides. Given this, the importance of disaster risk insurance for the vulnerable sectors becomes more strategically clear and obvious.
The Ambassador said that over the years, the great potential of insurance unfolded especially in the Philippines where a record of more than fifty million microinsurance policies were signed in 2021. Still, much more awareness and collaboration between the private and public sectors is needed in order to protect people effectively from risks. Extending insurance coverage to MSMEs and vulnerable households is intended to support adaptation to climate risk and to help these groups to better endure the effects of natural disasters. Relative to this, Ambassador Reiffenstuel mentioned that she is specifically fascinated with the achievements of RFPI Asia like the Payong app for MSMEs which was intended to improve the operational readiness and sustainability of MSMEs even during pandemics and natural disasters. Another RFPI Asia initiative, the Blockchain approach, provides an efficient, reliable, and cost-effective system for recording insurance transactions for claims processing. She added that over the last ten years the program has successfully contributed to the development of insurance market particularly for insurable climate risks, thanks to the support of GIZ. Awareness was raised and relying solely on family members to help out in times of income loss is not sufficient. Furthermore, the market was regulated with innovative tools that works in specific country contexts.
To close her remarks, Ambassador Reiffenstuel thanked RFPI Asia and all its partners for their commitment. She hoped that the partnership among stakeholders will be continued successfully in the future.
On behalf of Treasurer Rosalia De Leon, Deputy Treasurer Mariño stated that it is an honor to speak on the closing event of RFPI Asia which he believes is a smashing success. The RFPI journey and its accomplishments reminded him of the quote “A journey of thousand miles begins with a single step”, with the project’s first phase starting in 2013 with the aim of promoting inclusive insurance in seven Asian countries. At present, RFPI Asia is in its third phase which focuses on providing coverage to weather events worsened by climate change in the most vulnerable countries in the Vietnam, Indonesia, and the Philippines. Over the last ten years, RFPI Asia has forged partnerships, programs and achieved success, and its accomplishments have been nothing short of remarkable – from the tens of millions who now have access to innovative insurance to the many initiatives and responsive insurance products developed in its thousand miles journey. And he added that he firmly believes that the partners present in the event are still committed to another thousand miles journey to further promote pro-poor markets in Asia.
Deputy Treasurer Mariño took the opportunity to highlight the support activities of the RFPI Asia program implemented by GIZ. RFPI Asia undertook capacity building activities to make its partners better understand microinsurance, both in its value proposition and the inherent risk involved. The RFPI Asia team has worked with various regulators in order to build the necessary enabling environment not only to make microinsurance more affordable but also more accessible to those who need it most. The program also worked with the private sector to strengthen private-public partnership needed to strengthen and deepen the microinsurance market, including the design of microinsurance markets and understanding of the inherent risks. He added that RFPI Asia also created the MEFIN Network where experts can share their experiences with one another in order to better understand the challenges in implementing microinsurance and disaster risk insurance in general. Using the quote “Give a man a fish, and you feed him for a day. Teach a man to fish, and you feed him for a lifetime” resembles the approach of RFPI Asia by capacitating its partners to continue this program in the future.
The Deputy Treasurer continued by stating that the Bureau of Treasury is a key partner in RFPI Asia III and considered itself fortunate to witness the achievements of the program. Microinsurance coverage increased from less than eight million policies to more than fifty-three million policies in 2021, more than a six-fold increase in the span of a decade. In RFPI Asia III, the National Task Force on Climate and Disaster Risk Insurance was established in 2019 given the focus of this particular phase. The focus of increasing insurance penetration and coverage to these types of events goes hand-in-hand with national governments individual level strategic policy for its disaster risk financing and insurance which is to reduce the impact of natural disasters to the poorest and most vulnerable members of society and prevent them into falling into a cycle of poverty. Deputy Treasurer Mariño mentioned that arguably, this is the most difficult pillar of the strategy and the Bureau of Treasury is grateful for the continued support of GIZ RFPI Asia and the partners for helping them in making this pillar a reality.
Deputy Treasurer Mariño continued by stating that the goal of providing adequate financial protection especially to the most vulnerable is not unique to the Philippines. Across the globe, both the public and private sectors have prioritized minimizing the impact of disaster events on its people, be it climatological, meteorological, geological, biological, or human. These can be seen in the unprecedented efforts in addressing the Covid19 pandemic and the shift from a reactive to a more proactive approach in disaster risk management. He added that the Disaster Risk Management Base shows that forty percent of all natural disasters have occurred in Asia since the turn of the twentieth century. He cited that the onslaught of typhoon Haiyan in the Philippines, the Vietnam floods in November 1964, and 2004 Indian Ocean earthquake and the tsunami that followed which impacted Northern Indonesia will never be forgotten. The impact of these disasters have been seen first hand most especially on the poor and most vulnerable – billions worth of damages, livelihood affected and lives lost. All of these show the importance of the work done and continue to being done by RFPI Asia in promoting inclusive and pro-poor insurance especially in the Philippines. Deputy Treasurer Mariño added that while disasters may be inevitable and unpredictable, comfort should be taken by the fact that much has been done to minimize the impact especially to the most vulnerable sectors. From previously reactive responses, governments across Asia has placed more importance to be more proactive risk managers.
To end his remarks, the Deputy Treasurer cited a quote from Helen Keller which he believes applies to the RFPI Asia journey; “Alone we can do so little, together we can do so much”. The ten years of RFPI Asia and continued collaboration among partners has been nothing short of fruitful. He expressed his gratitude for the partnership between and among this committed community and has no doubt that greater things will happen because of the foundation that the RFPI Asia program has laid. He congratulated the RFPI Asia team, the partners and chmpions and wished them all more successful years ahead.
IV. The RFPI Asia Journey Video Showing
At this point of the event Mr. Darong called on the Senior Advisor for Policy – Asia, Mr. Dante Portula To walk the audience more through the ten-year journey of RFPI Asia. Mr. Portula explained that this segment is actually a video showing the contributions and accomplishments of RFPI Asia in market development for inclusive insurance in the Philippines and in Asia. He asked for the audience’s attention in reliving the RFPI journey through the years.
V. Testimonials from Key Partners
Mr. Portula continued to handle this segment, stating that the successful journey of RFPI was made possible through an ecosystem of partners and a battery of champions have paved the way for a stronger, smarter, and better program implementation. To this he called on some pillars of the insurance industry of the Philippines who have supported RFPI Asia since the beginning to give their testimonials.
Mr. Rellosa started by thanking RFPI Asia for giving him, PIRA, and the non-life insurance sector the opportunity to be a part of the event. He mentioned that his group has had the privilege of working with GIZ for over a decade. During that span of time, the industry gained working knowledge and insights into development of climate and disaster risk insurance with particular focus on risk protection solutions for the poor. He went to mention that inclusive insurance has been in the forefront of GIZ’s agenda and the insurance industry shared this view with equal passion and zeal. As insurance practitioners, they are well aware of the important they play in disaster resilience and sustainability which was made more pressing in this day and age. More needs to be done immediately and it has become imperative for the industry to bring insurance solutions closer and within reach to the most vulnerable population. Quoting former Finance Secretary Cesar Purisima, “Financial inclusion works on the simple principle that the bigger chunk of the population you draw in and protect, the bigger your chances of economic success.
When the most vulnerable wins, we all win”. At this point, he stated the vital role of GIZ in accelerating the development of inclusive insurance through the RFPI Asia program which much to his chagrin is ending in this culminating event.
The program was implemented in 2013 with the aim of promoting inclusive insurance in seven Asian countries including the Philippines, focusing on the provision of risk protection through insurance solutions to cover extreme weather events due to climate change. The Philippines for so many years has been listed as one of the disaster-prone countries largely due to its geographical location. Mr. Rellosa explained that the country lies in the boundary of major tectonic plates and is at the center which are regularly impacted by floods, typhoons, landslides, earthquakes, volcanoes, and droughts. According to World Index Report 2022, the Philippines now ranks first in the list of global disaster risk hotspots with an index score of 46.82 followed by India and Indonesia. Under this disaster-prone backdrop, the Philippines has long struggled to address the effects of climate and seismic risks through various means. One such solution which has proven to be effective and invaluable was the introduction of microinsurance products.
Then RFPI Asia Program Director Dr. Antonis Malagardis clearly shared his vision that the main objective of the program was to develop and implement a regulatory framework, a strategy and a financial literacy road map on microinsurance. The insurance industry recognized how GIZ provided the necessary framework and model for microinsurance in the country and supply the much needed materials to educate the stakeholders. Through this holistic approach provided by GIZ, the government and private sector worked together at a uniform pace which in the end benefitted all participants including beneficiaries of microinsurance. Mr. Rellosa further stated that the number of beneficiaries from short-term inexpensive microinsurance products rose to a record 53.7 billion pesos in 2021 alongside total premiums which exceeded the ten billion mark for the first time. As far as the non-life insurance is concerned, it also grew its microinsurance premiums by 31.5% to 1.2 billion in 2021 from the previous year’s 913 million.
Mr. Rellosa said that the industry owes it in part to GIZ for pioneering a distribution channel for microinsurance by tapping the network of a well-known and reliable pawnshop with presence in key areas all over the Philippines and using them for both sales and claim payouts thereby gaining more access to more vulnerable Filipinos. Short-term and inexpensive microinsurance products has been increasing in sales. But for catastrophe perils covered by the non-life sector, there was the realization that microinsurance is not the only way to directly address the gap. Recognizing that a multi-sectoral was essential to address the insurance gap, the Philippine insurance industry together with the Insurance Commission, and with the guidance and technical assistance of the World Bank and GIZ with inputs from the top local brokers, collaborated on the creation of the Philippine Catastrophe Insurance Facility (PCIF). Mr. Rellosa explained that the facility was envisioned to re-direct CatRisks written by the local industry into a facility that will share the pooled risks with participating companies. By doing so, this enables insurers to cover more catastrophe risks and at the same time allowing them to manage their exposures to catastrophes more effectively. He added that in the course of its development, the PCIF morphed into two workstreams; PCIF 1 which covered the just mentioned existing pooling mechanism and PCIF 2 is being set up to cover the underserved portion of the populace – the residential and MSME markets. Target markets are class C, households numbering around six million or thirty million individuals as well as Class B with 12 million households or sixty million individuals. The PCIF 2 will be a property insurance product covering cat perils that has two parts: the first is indemnity based and the second is the parametric part that would ensure an early payout which is badly needed with most disasters. The amount to be covered remains small in order to cater to the underserved portion of the population.
However, Mr. Rellosa explained that the rate will be adjustable as it can bought in small increments or units up to a specified amount. Throughout the development stages, GIZ has written and supplied comprehensive materials and fact sheets on PCIF which was shared to all stakeholders ensuring that everyone has a common and clear grasp of the program. With the support and technical expertise provided by GIZ, PCIF 1 will go live this December and GIZ continues to assist in the development of PCIF 2, providing the necessary research for the program.
The insurance industry, PIRA included, owes a debt of gratitude to GIZ for its immense work and effort in the creation of climate and disaster risk protection for our countrymen. Mr. Rellosa congratulated everyone in GIZ for the hard work, perseverance, grassroots approach, and the unwavering commitment of everyone. He added that the work ethic and dedication to achieve what it wants to do, deserves all the praise and admiration. The industry couldn’t have asked for a better partner. He thanked everyone involved and wished them all the best.
For his testimonial, Atty. Dooc dwelled on his journey working with GIZ and the RFPI Asia program. He started by saying that upon his retirement in 2016, he found a new vocation in the form writing a column for the newspaper Business Mirror. Last week, his column was about removing taxes from microinsurance and he gave the reasons why these should be removed. And today, to celebrate the closing event of RFPI Asia, he wrote about the program and its journey in the country. In his column, he cited all the laudable accomplishments of RFPI Asia through GIZ and the wonderful people who led what he termed “the movement”, referring to microinsurance. In this column, he also cited then Program Director of RFPI Asia Dr. Antonis Malagardis whom he jokingly referred to as a man of many plurals. Atty. Dooc believes that fate was responsible for bringing Dr. Malagrdis to the industry as at that time, a lot of help was required. And he thanked Dr. Malagardis for leaving the industry with a legacy in the form of RFPI Asia.
Atty. Dooc mentioned that at the turn of the century, the Philippines developed its Medium-Term Development Plan and in that plan, it was cited that there was an urgent need to provide risk protection to the poor. He added that for the country to win its battle against poverty, the underprivileged, and the underserved need to be secured against death, sickness, disability, injury and disasters. He emphasized that these bring untold tragedies to households that can’t even provide food, clothing, shelter, and medicine to its members. And so microinsurance was developed in order to protect the poor against unforeseen events and hazards of daily life. With this, the seeds of microinsurance was planted and gave credit to his predecessor at the Insurance Commission for coming up with a framework on microinsurance for the Philippines. And he credits GIZ for coming in to help the Insurance Commission and he deemed himself fortunate to be the Commissioner at that time which happened to be the formative years of microinsurance. Atty. Dooc stated that now, we see the regulations, the guidelines, the activities which excited the insurance industry and finance world as well with the support of then Finance Secretary Cesar Purisima and Undersecretary Gil Beltran whom he believes should be honored as well for the great job they did in microinsurance. He further added that at the head of that movement was GIZ and its program, RFPI Asia.
He recalled that in 2013, GIZ and RFPI Asia created a body composed of regulators from selected Asian countries in an event in Cebu which was called the Mutual Exchange Forum on Mutual Inclusive Insurance (MEFIN) and that, for him, is one of the greatest successes of RFPI Asia. Quoting from Dean Atkinson, the former State Secretary of the United States “I was present at the creation”, Atty. Dooc also said that he was present during the creation of MEFIN and was elected as the first and founding chairperson of the network. He continued to state that MEFIN was created as a platform for exchange of ideas, dialogues, education and training among its seven member countries. As the chairperson, he travelled in the region – Vietnam, Indonesia and even Nepal where he had the pleasure of surveying the top of Mount Everest. In today’s event, many have already cited the accomplishments of RFPI Asia; but for him, he reiterated that the founding of the MEFIN was a major feat.
Atty. Dooc went on to state the framework for Micro-health in the Philippines is a major achievement particularly in light of the pandemic. The same goes for the framework of Micro-agriculture insurance; although he believes that it is still in the pipeline because that is included in the third phase of RFPI Asia. He added that these are the developments that we should be really proud of, that we are a part of history. Microinsurance is the shield of the poor against tragedies and calamities. And that’s why his advocacy now is to remove the taxes from microinsurance. Atty. Dooc mentioned that he has written about this to House Speaker Martin Romualdez and similarly, to Senate President Miguel Zubiri two weeks ago. Fortunately, former Senator Richard Gordon read his column on the abolition of taxes on microinsurance and he received an email from the former senator asking him to draft the bill for this which he will by next week. And he informed the body that he is a lucky sponsor of legislations. He cited that some years back, he was able to reduce the premium tax from five percent to two which the life insurance companies now enjoy. During his term as Insurance Commissioner, he was able to draft the Insurance Code and became a law, thus it is now the governing legislation for the insurance industry in the country. When he became the President of the Social Security System (SSS), they were able to amend the SSS Code and also became a law. So now he is in talks with Mr. Rellosa to line up all microinsurance players to support the abolition of microinsurance taxes. To show the benefits the initiative could bring, he cited that a microinsurance provide would have to pay anywhere from 25% to 27.5% in taxes which translates to losing 27.5 pesos for every one hundred pesos that a person pays for microinsurance. The amount that goes in taxes can actually go into improving benefits for microinsurance policies; the same amount could also allow insurance providers to give more comprehensive coverage. It hasn’t happened yet but Atty. Dooc hopes to make it happen. And he believes that tax abolition could be the next story in microinsurance. He added that when he was transferred as President of the SSS, he carried the spirit of protecting the low salaried employees of the country and his first act then was to increase by one thousand pesos the monthly pension of every pensioner.
The Philippines is a known leader in microinsurance and is looked up to by other Asian countries. In a big microinsurance event in Germany and upon the recommendation of GIZ, Atty. Dooc recommended Cebuana Lhuillier as a speaker to preach the gospel of microinsurance as the company was able to do good business selling microinsurance products through their three thousand branches all over the Philippines and is a good business model to adopt. When Mr. Batangan of Cebuana Lhuillier presented his statistics, quite a number of participants found them to be incredible with one regulator actually challenging the figures and further asking if there was a regulator who monitors the industry’s activities and can confirm the figures presented. As he was also present in the event, Atty. Dooc stood and informed the body that he represents the regulator in the Philippines and is willing to answer all questions during the session.
Towards the end of his testimonial, Atty. Dooc said that while this is a closing event it should not be treated as a sad event. He continued to say that instead, everybody should be happy RFPI Asia happened even as it is leaving us. He again thanked RFPI for changing the landscape of microinsurance in the Philippines.
For his testimonial, Mr. Beltran talked on the role of RFPI Asia in filling up the regulatory and policy gaps that were present in the insurance industry during the program’s decade long run. RFPI Asia and the MEFIN network helped catalyze a big transformation in the Philippine insurance industry from an elitist and limited product available only to the wealthy and big business into a more inclusive and affordable product. Mr. Beltran stated that by the end of 2021, 53.7 million Filipinos or almost half of the Philippine population were covered by microinsurance policies. This provided 10.1 billion pesos in terms of insurance premiums, with insurance penetration boosted to 1.93%, the highest in the country’s history. He added that insurance density during that time reached 3,400.00 pesos per individual.
These great strides were not achieved overnight. Before the National Microinsurance Strategy and Regulatory Framework were launched in 2010, nationwide consultations showed that microinsurance activities were mostly done in an informal manner by unregulated institutions with potential mismanagement in this sector posing as risks to other businesses, the insurance industry’s reputation, and the clients themselves. To address the situation, formalization was encouraged and a regulatory framework was created to make microinsurance viable and sustainable.
Mr. Beltran stated that to make the poor understand and have confidence in the product through a good regulatory framework, a nationwide financial literacy campaign was launched. For insurance providers, microinsurance was considered a riskier venture compared to retail or commercial insurance as the main market for microinsurance was the low-income sector which was more vulnerable to disasters and calamities. He explained that one percent of country’s GDP is lost to calamities, a large part of it to the twenty typhoons that ravage the country each year; add to these are the El Niño drought, earthquakes, and volcanic eruptions that occur now and then. The demand for the product exists, it just needed to be developed.
When the microinsurance regulatory was launched in 2010, insurance penetration hovered around the low one percent mark, insurance density at around one thousand three hundred pesos, and microinsurance only covered only 3.2 million lives. In 2012, just two years after the launch, microinsurance clientele rose to an unprecedented twenty million people, density rose to 1,650.00 pesos, and penetration to 1.5%. Mr. Beltran added that since its introduction, microinsurance has played an important role in financial inclusion and risk mitigation for the poor, played a key role in helping to re-build lives after every typhoon. In 2013 after the strongest typhoon to hit land, Yolanda, 111,000 microinsurance claims were paid out to clients amounting to a total of 532 million pesos. Access to insurance and timely responses on the part of insurers acted as a good safety net for many Filipinos and contributed to the recovery of the affected areas. He continued to explain that in the same year, steps were taken to further improve the country’s insurance system by amending the nearly forty year old Presidential Decree no. 612 under Republic Act 10607. The law included a revision that strengthens the insurance industry as a whole by ensuring that the stability of insurance players by periodically increasing capital requirements for life and non-life insurance companies until 2022. It likewise adopted a definition of microinsurance as a financial product or service that meets the risk protection needs of the poor by charging affordable premiums.
Mr. Beltran further elaborated that more efforts were done in order to create the necessary frameworks to support the burgeoning microinsurance industry by building upon past initiatives and regulations such as the 2015 Enhanced Microinsurance Regulatory Framework, expanded accessibility to insurance products, and introduced risk-sharing mechanisms for microinsurance providers. Recognizing that one key component for fostering a healthy regulatory and policy environment is clarity, frameworks such as the 2015 Microneed Regulatory Framework, the 2015 Agricultural Microinsurance Framework, and the 2016 Health Insurance Framework established clear-cut policies for microinsurance providers for each sector such that the insurance products are tailored to the financial capabilities of their clients. These frameworks not only increased consumer protection in these sectors but also widened the possible scope of insurance products. Now, there are already various climate and disaster risk products that pay out policy holders for damages due to flooding and earthquakes. Work was also done to improve distribution systems for insurance products through the 2016 Industry Distribution Channels and Consumer Protection Framework. Cooperatives, insurance agents, and insurance brokers were allowed to distribute microinsurance products through various channels to improve microinsurance products accessibility and reach out to the vulnerable.
Information dissemination was a key consideration in bringing microinsurance to the masses. In the past, insurance was viewed as too complex a product to sell to the poor. Microinsurance affordability, accessibility, and easier pay out process was tailor-made to the low-income sector. Staff from government agencies and local insurers were trained through seminars and roadshows and tasked with spreading awareness on microinsurance products to the income sector. In this regard, Mr. Beltran said that RFPI Asia was very instrumental by providing their technical assistance and helping in promoting activities on microinsurance. The wider availability and awareness of microinsurance products not only helps the government’s poverty reduction efforts by providing safety nets and means to recover for the poor but it also a fifth pillar of our thrust for equitable and sustainable growth. The Covid19 pandemic is a good example for this. With the efforts in spreading awareness in microinsurance and the pandemic nudging out more of the population, even the middle class, to look at microinsurance to protect against unmitigated possible losses due to health risks posed by the pandemic. The Insurance Commission’s goal of fifty million Filipinos with microinsurance polices in 2022 was achieved in 2020. Microinsurance gave Filipinos a much-needed financial handle to work with and avoid deeper financial difficulties amidst the recession.
Towards the end of his testimonial, Mr. Beltran shared his personal takeaways and insights from this journey. First, policy making for microinsurance products should continue to be closely aligned to the goals of key agencies such as those in the health and agriculture sectors. Second, recognizing the success in the frameworks of the insurance industry is in no small part due to the tight partnerships and coordination between public and private sectors. This multi-stakeholder approach that were used in developing the backbone of microinsurance policies also allowed the sharing of best practices with other MEFIN countries in their own bids to provide microinsurance products to those who need them. Finally, there is still a need to address the formalization of microinsurance products, encouraging both insurance providers and consumers to formalize to enable us to set up frameworks to protect both sides of the transaction and foster a healthier, more transparent business environment. Mr. Beltran added that while the RFPI Asia program draws to a close, government will take the lessons and insights that were gained over the last decade or so and continue to make meaningful strides in developing the microinsurance industry. He thanked the German government for assisting the program and also the Asian Development Bank for the assistance is some parts of the financial literacy program which also contributed to the success of RFPI Asia.
The intermission was provided by the Insurance Commission Chorale which sang a melody of songs that were all reflective of the spirit that drove the success of the RFPI Asia program – collaboration, cooperation, determination, and perseverance. For their final number, the Chorale sang the Microinsurance song which proved very instrumental during the campaign to create more awareness on the value of microinsurance.
VII. Awarding of Plaques of Recognition
During its decade long run, RFPI Asia received valuable support and assistance from institutions and individuals that greatly contributed to the accomplishments and over-all success of the program. This segment was intended to recognize these outstanding persons and institutions whose contributions greatly influenced the success of the program. The recipients of the Plaques of Recognition were as follows:
• Mr. Gil Beltran
• Atty. Emmanuel Dooc
• Ms. Vida Chiong
• Mr. Joselito “Itoy” Almario (Posthumous) Indonesia
• Mr. Firdaus Djaelani
• Mr. Jakub Nugraha
• Prof. Fatta Bahadur K.C.
• Mr. Syed Nayyar Hussain
• Dr. Davaasuren Sodnomdarjaa
• Mr. Ulziibat Molamjamts
• Bureau of Treasury
• Insurance Commission
• Department of Science and Technology – GeoRiskPH
• Department of Trade and Industry
• Provincial Disaster Risk Reduction and Management Office - Agusan del Norte
• Philippine Insurers and Reinsurers Association, Inc.
• Philippine Life Insurance Association, Inc.
• Rimansi Mutual Solutions Insurance Agency Inc.
• 1 Cooperative Insurance System of the Philippines Life and General Insurance
• Cebuana Lhuillier Insurance Brokers, Inc.
• AXA Philippines
• Pioneer Life, Inc.
• Cooperative Health Management Federation
• Ministry of Finance - Insurance Supervisory Authority
• Vietnam Women’s Union
• Vietnam Farmers Union
• Ministry of Agriculture and Rural Development
• Insurance Association of Vietnam Indonesia
• Otoritas Jasa Keuangan – Non-Bank Sharia Financial Institutions
• Kementerian Kelautan dan Perikanan
• Asosiasi Asuransi Umum Indonesia
• Induk Koperasi Kredit
• AXA Financial Indonesia
• Financial Regulatory Commission
• Ulaanbaatar City Insurance
• Monre Insurance company
• Beema Samiti
• Shikhar Insurance
• Nepal Life Insurance
• Securities and Exchange Commission of Pakistan – Policy, Regulation and Development Department
• EFU Life Assurance Ltd
• Insurance Regulatory Commission of Sri Lanka
VIII. Dialogue on Key Challenges on Inclusive Insurance
While the accomplishments and achievements of RFPI Asia were celebrated during the event, the program is fully aware of the realities, limitations, issues, expectations, and opportunities or collectively considered as “The Challenges” that surround inclusive insurance. This segment will introduce biodiversity as a potential topic for inclusive insurance in the future and promote it for future partnerships and activities.
Mr. Jimmy Loro, Chief Advisor of the GIZ Manila project South-South Collaboration on Climate Information and Services, together with Ms. Andrea Teran, Chief Advisor of the Strengthening Disaster Risk Resilience and Risk Mitigation Ecosystem Based Planning and Adaptation, carried on a dialogue to highlight the challenges and opportunities for insurance-based solutions for biodiversity.
Key Points of the Dialogue
• What are the challenges faced in biodiversity and insurance?
The project Andrea works on focuses on both biodiversity and insurance. Not a lot know about using insurance for biodiversity protection and it is actually an exciting opportunity to work on creative solutions for ecosystems restoration.
• What can inclusive insurance contribute to address the challenges and what needs to happen for it to be successful?
Ecosystems and insurance work well together. Natural ecosystems provide services as well as protection like coral reefs reducing the height of tsunamis, mangrove forests preventing flooding. As such its valuation not only comes from productive ecosystem services but also from the protection aspect. Combined together, the natural protection of ecosystems can encourage insurers to insure property and life in the zones that are protected. Local governments can invest in ecosystems protection and that can encourage insurance coverage in the area and investments can happen once it is known that there is insurance coverage in the area. In a sense, there is double protection. On one hand for ecosystems protection services and on the other hand, the additional financial protection provided by insurers.
• What types of partnerships are needed for each area to achieve significant progress?
GIZ works on a multi-level approach – policy level with national partners and actual groundwork in order to see how to mainstream the learnings collected into either local or national level policy. Given that, a multi-sectoral approach with government private sector, NGOs and CSOs will need to happen. Such an approach may also open up space to allow government agencies that normally don’t interact with one another to do so. For example, the Department of Environment and Natural Resources and Natural Resources and the Insurance Commission. GIZ will support to convene national partners and identify new areas for cooperation.
The E4DR project aims to protect ecosystems and biodiversity to help people adapt to climate change. As such there is an opportunity to value nature, ecosystems services not only in a financial manner but also relational. People will not only derive a living nature but likewise derive well being from it. In strengthening disaster resilience and mitigating risks, the project could proceed in the way that RFPI did in microinsurance – who are the most vulnerable and bring them into the partnership as well and see how they value nature, what do they value in nature – and work in a way to protect nature as they live with and off natural products and ecosystems services.
Interestingly, PIRA and the Earth Security Group initiated a project on ensuring mangrove systems. There are also innovative products such as coral reef insurance in Mexico.
• Are there any low-hanging fruits or trends that may trigger positive change in this direction?
The E4DR project will work in Region 8. In terms of insurance, the challenge might be that the region is a disaster-prone area and insurers might not be interested to offer products in such an area. However, the project has a goal of developing new climate risk insurance products and it’s really more on how insurance products can be offered despite a place being disaster-prone. In the study of PIRA and the Earth Security Group, it cited how mangrove forests can provide additional protection in terms of life and property behind the mangrove and coastal areas. While there is a goal of developing new climate risk insurance products, there is the low hanging fruit of increasing insurance coverage in an area that is hard hit by storms or typhoons by lowering premiums just because these natural protections already exist.
• Why should the government and private sectors cooperate for this project?
The main goal is to mainstream ecosystems-based adaptation in local and national planning and also for budgeting. The partners are the National Economic and Development Authority (NEDA) both on a national and regional level, the Department of Agriculture (DA) for the agriculture sector on how to make agriculture less carbon intense, how ecosystems-based approach can ensure livelihood for farmers, the Insurance Commission in order to come up with a regulatory framework on climate risk insurance and for developing new climate risk insurance products. As for the private sector, the project will network with the industry players for developing policies and of course the work in Region 8.
IX. Formal Handover of the Mutual Exchange Forum on Inclusive Insurance Network (MEFIN) to the Access to Insurance Initiative (A2ii)
One of the major successes of the RPFI Asia program is the establishment of the MEFIN Network in 2013. MEFIN is composed of regulators from seven Asian countries – the Philippines, Indonesia, Vietnam, Mongolia, Nepal, Pakistan, and Sri Lanka – with the purpose of serving as a platform for peer-to-peer learning platform among policy makers and insurance regulators in Asia. This session symbolizes the formal handover of the MEFIN Network from RFPI Asia, represented by Program Director Dr. Alexander Jaeger, to the Access to Insurance Initiative (A2ii) represented by the Head of the A2ii Secretariat, Ms. Hannah Grant, thereby supporting the sustainability of the network in the future.
• Dr. Alexander Jaeger
Dr. Jaeger stressed that the sustainability of the MEFIN network is of key importance to RFPI given that the world of insurance is constantly evolving with the emergence of new topics such as insurtech gaining importance. Capacity building and peer-to-peer learning becomes more important for industry players and insurance regulators. MEFIN, with its wealth of knowledge and experience, could still provide some benefit in this evolving environment. He further explained that RFPI was fortunate to find an able and willing partner in A2ii that will support the network after RFPI Asia has closed. RFPI Asia and A2ii developed jointly a Transition Plan wherein MEFIN would be integrated into the regional activities of A2ii. It is a win-win development as A2ii and MEFIN could build on each other’s strengths and competencies and help in empowering Asian supervisors in the future. With this. Dr. Jaeger called on Ms. Hannah Grant to welcome MEFIN into the A2ii network.
• Ms. Hannah Grant
For her part, Ms. Grant stated that they are delighted to welcome the MEFIN Network into the A2ii’s Asian regional activities. She believes that the knowledge and relationships developed by MEFIN in the last decade are assets that the A2ii could leverage on for its Asian activities. A2ii is the IAIS implementing partner in financial inclusion and capacity building and as such works with insurance supervisors to help build the knowledge needed in implementing regulations on supervision supportive of greater financial inclusion. She added that A2ii’s vision is that more poor and vulnerable people have access and use of affordable insurance appropriate to their needs. The integration of MEFIN will help A2ii in achieving this mission and support the development of inclusive insurance markets in Asia. Initial steps have been undertaken to ensure that the learnings of MEFIN’s are not lost and she invited everyone to check A2ii’s website where the network’s knowledge products are now available alongside A2ii’s knowledge resources. Ms. Grant also informed the audience that a former RFPI Asia staff will be the Regional Coordinator for Asia, driving A2ii’s activities in the region. To conclude, she again took the opportunity to welcome the MEFIN network in the A2ii regional activities and looked forward to working closely with them. She also thanked Dr. Jaeger and the RFPI Asia team for including her in the event and the audience for its attention.
X. Closing Remarks
Dr. Alexander Jaeger
Dr. Jaeger started by thanking everyone for joining the RFPI Asia final event as a project and as a journey. He is very honored to give the closing remarks given the importance of the event and the success of the program which he attributed to the support of so many individuals and organizations. He recalled the time that he was asked by then Country Director Irina Scheffmann to take over the RFPI Asia program in 2021 and how he felt very welcome given the warm spirt given by the RFPI team and its partners. Looking back, he thanked Irina for giving him the opportunity to steer the program in its last 12 months towards a safe and successful conclusion. RFPI Asia’s achievements have been mentioned during the event but he asked to be allowed to share two more success stories from public-private partnerships that were added to RFPI activities due to the team’s genuine interest and boundless creativity in improving people’s lives. First was the cooperation with 1CHMF in the Philippines which tried to address the challenges of Corona through telemedicine which allowed for timely medical advice. As a result of the joint efforts, the first telemedicine in the corporate sector of the Philippines was set up and numerous users are using this facility. Second, the partnership with AXA Financial of Indonesia and the microinsurance umbrella network Inkopdit was truly fruitful as the project partnership managed to formalize previously unregistered insurance services for three million clients for microinsurance institutions and along the way created probably the first ever microinsurance brokerage of Indonesia.
Dr. Jaeger continued by stating that equally important for the successes in the past are new leads and initiatives which for which the program prepared on the ground and hopefully will bear great fruits in the future. One is in the Philippines, an initiative already mentioned, that will carry on climate change and biodiversity topics in insurance. It Is a new project called Strengthening Disaster Risk Resilience and Risk Mitigation Ecosystem Based Planning and Adaptation. Dr. Jaeger jokingly mentioned that he is a bit jealous of his colleague Andrea Teran who will have the chance to continue this journey. RFPI Asia has also started to work on Public Assets Insurance in Vietnam where it has brought together a whole range of international partners to build capacities for four ministries under the guidance of the Insurance Supervisory Authority of Vietnam. And these activities will carry over to new GIZ projects that will work on data infrastructure in the legal environment for this kind of insurance.
At this point, Dr. Jaeger thanked the various individuals and institutions who contributed to the success of RFPI Asia in the last ten years. He thanked the BMZ for trusting GIZ for the implementation of RFPI. He added that it takes a long term vision and reasonable understanding of the topic to invest in inclusive insurance for such a long span. Without this vision and commitment from the ministry, none of the achievements of RFPI would be possible. The second, which is close to his heart, he acknowledged the contributions of the RFPI team members and GIZ colleagues. Dr. Jaeger stated that the team worked very, very hard at any time under challenging conditions over the last two and a half years and it produced fantastic results. In many times, he was amazed by the competence of his colleagues and the great respect they enjoy with the industry. As a result of their efforts and in recognition of their potentials, two of them are now heading their very own projects, Jimmy Loro and Gian Galsim, and he congratulated both. Ronnie Limbago will join A2ii as its Regional Coordinator for Asia.
To conclude, Dr. Jaeger thanked again the partner institutions for all the years of close and trusted collaboration. The self-understanding of RFPI Asia was always that they are only there to support the partners’ great work. And the partners are the ones who deliver the benefit to the people. He thanked them for the trust, the openness and great cooperation. Dr. Jaeger hoped that they will keep this project and the team in memory and that they can build well on the legacy the program left behind. Dr. Jaeger the proposed a toast. “To our great achievements and wonderful collaboration of the last ten years; of RFPI Asia extending protection to people and small companies that they did not enjoy before. The future holds many risks and uncertainties and that financial protection and resilience seem to be more relevant than ever. Therefore, may the winds of the past push achievements of the future to a safer and more prosperous world for those who need it most. To our objectives and accomplishments, and to all the great people that made it possible to what is being celebrated here today”.