Microinsurance: the CARD MBA

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Microinsurance:

the CARD MBA

By:

Dr. Jaime Aristotle B. Alip

CARD MRI Managing Director

June 2005, KfW, Tbilisi, Georgia

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CARD MRI

“CARD is a group of mutually reinforcing

institutions that aims to transfer ownership,

management, and control of resources to

landless poor women.

CARD is committed to provide continued access

to microfinance services to an expanding

client base by organizing and empowering

landless rural women.”

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CARD MRI ORGANIGRAM

CARD MRI

CARD NGO Microfinance (1987) CARD Bank (1997) CARD MBA (1999) CARD Training Institute 2003 CARD Marketing (2006) CARD Housing (2008)

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CENTER FOR AGRICULTURE AND RURAL DEVELOPMENT MUTUAL BENEFIT ASSOCIATION, INC.

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CARD-MBA MISSION STATEMENT

CARD-MBA

is a mutual benefit association formed to

promote the welfare of marginalized women; to extend

financial assistance to its members in the form of death

benefits, medical subsidy, pension and loan redemption

package; and to actively involve the members in the direct

management of the association including formulation and

implementation of policies and procedures geared towards

sustainability and improved services.

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BRIEF HISTORY

April 1994

Members’ Mutual Fund (MMF) was established for loan redemption in case of death of member-borrower.

September 9, 1999

the ownership and management of MMF were turned over to the members and from then on it was called CARD Mutual Benefit Association, Inc., better known by its acronym CARD MBA.

October 29, 1999

CARD MBA

was registered with the Security and Exchange Commission (SEC). This gave CARD MBA its legal personality as a non-stock and non-profit organization

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August 1, 2000

CARD MBA was registered with the Office of the Insurance Commission as a mutual benefit association

This was the reckoning date for the refund of contribution of resigning members.

May 22, 2001

Office of the Insurance Commission released the license of CARD MBA to operate as a mutual benefit association.

MEMBERSHIP

Started with 26,352 members. This has increased to 124,733 by December 2004.

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PRODUCT LINES

1.

Life Insurance Program

2. Provident/Retirement Savings Fund

3. All Loans Insurance Package

4. Refund of Contribution

**Non

-

Financial Services**

1.

Livelihood Training Program

2.

Iskolar ng CARD MBA

3.

Marketing Assistance

4.

Mass Wedding

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CONTRIBUTIONS

MODE OF MODE OF PAYMENT PAYMENT

AMOUNT OF CONTRIBUTIONS FOR AMOUNT OF CONTRIBUTIONS FOR

LIFE LIFE INSURANCE INSURANCE PROVIDENT PROVIDENT FUND

FUND TOTALTOTAL

1.5% per annum of the amount of loan which is deducted from the loan proceeds. Period of cover is co- terminus with the term of loan.

WEEKLY P5.00 (US$0.09) P5.00 (US$0.09) P10.00 (US$0.18) MONTHLY P20.00 (US$0.37) P20.00 (US$0.37) P40.00 (US$0.74) QUARTERLY P60.00 (US$1.11) P60.00 (US$1.11) P120.00 (US$2.22) SEMI- ANNUAL P120.00 (US$2.22) P120.00 (US$2.22) P240.00 (US$4.44) ANNUALY P240.00 (US$4.44) P240.00 (US$4.44) P480.00 (US$8.88)

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CARD MBA LIFE INSURANCE

BENEFITS

LENGTH OF MEMBERSHIP

CAUSE OF DEATH OR TOTAL AND PERMANENT DISABILITY

MEMBER LEGAL DEPENDENT

LESS THAN 1 YEAR DUE TO PRE-EXISTING CONDITION Php1,000.00 (US$18.51)

none DUE TO SICKNESS/DISEASES AFTER

RECOGNITION Php3,000.00 (US$55.55) Php3,000.00 (US$55.55) DUE TO ACCIDENT Php10,000.00 (US$185.18) Php3,000.00 (US$55.55) MORE THAN 1 YEAR

BUT LESS THAN 2 YEARS DUE TO SICKNESS/DISEASES Php3,000.00 (US$55.55) Php3,000.00 (US$55.55) DUE TO ACCIDENT Php13,000.00 (US$240.74) Php3,000.00 (US$55.55) MORE THAN 2 YEARS

BUT LESS THAN 3 YEARS DUE TO SICKNESS/DISEASES Php16,600.00 (US$307.40) Php6,000.00 (US$111.11) DUE TO ACCIDENT Php31,600.00 (US$585.18) Php6,000.00 (US$111.11) 3 YEARS AND ABOVE DUE TO SICKNESS/DISEASES Php16,600.00

(US$307.40) Php6,000.00 (US$111.11) DUE TO ACCIDENT Php36,600.00 (US$677.77) Php6,000.00 (US$111.11)

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Total and Permanent Disability Monthly Benefits

MONTH PARTICULARS CONTRIBUTION (Php)

AMOUNT OF MONTHLY BENEFITS FOR Php 16,600.00 (US$307.40) Php 6,000.00 (US$111.11) Php 3,000.00 (US$55.55) 1ST _{Notice of Disability} _20.00_(US$0.37) 922.00

(US$17.07)

333.00 (US$6.16)

167.00 (US$3.09) 2ND _-6TH _{Observation Period} _100.00_(US$1.85) _4,610.00

(US$85.37) 1,665.00 (US$30.83) 830.00 (US$15.37) TOTAL 120.00 (US$2.22) 5,532.00 (US$102.44) 1,998.00 (US$37.00) 996.00 (US$18.44) Total amount of contribution for six (6) months

(to be refunded only if the member is the one who was disabled) 120.00 (US$2.22)

120.00 (US$2.22)

120.00 (US$2.22) Total amount of first payment of benefits 5,652.00

(US$104.66) 2,118.00 (US$39.22) 1,116.00 (US$20.66) 7th _{to 18}th _{Amount of Benefit} ₀ _922.00 (US$17.07) 333.00 (US$6.16) 167.00 (US$3.09) TOTAL Php 16,720.00 _(US$309.62) Php 6,120.00 _(US$113.33) Php 3,120.00 _(US$57.77)

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PROVIDENT FUND

It is an administered fund intended for the retirement of members that can be availed of in lump sum at age 65.

An active member pays a weekly contribution of Php5.00 (US$0.09) until she reaches the age of 65.

These contributions are being placed in almost risk-free, high- interest bearing instruments, ex. Government retail bonds, time

deposits and institutional loans.

Depending on the entry age of the members in the association, the accumulated fund at age of 65 assuming default-free weekly contribution, their retirement funds allotted to them are shown in

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Table of Benefits at Age 65

A G E CONTRI-BUTION (US$) BENEFITS AT AGE 65 (US$) A G E CONTRI-BUTION (US$) BENEFITS AT AGE 65 (US$) A G E CONTRI-BUTION (US$) BENEFITS AT AGE 65 (US$) 18 208.89 2,316.22 34 137.77 606.43 50 66.66 129.02 19 204.44 2,134.42 35 133.33 555.66 51 62.22 114.84 20 200.00 1,966.56 36 128.88 508.79 52 57.77 101.76 21 195.56 1,811.56 37 124.44 465.51 53 53.33 89.67 22 191.11 1,668.44 38 120.00 425.55 54 48.88 78.50 23 186.87 1,536.28 39 115.55 388.65 55 44.44 68.21 24 182.22 1,414.26 40 111.11 354.58 56 40.00 58.70 25 177.78 1,301.59 41 106.66 323.86 57 35.55 49.91 26 173.33 1,197.55 42 102.22 294.07 58 31.11 41.80 27 168.89 1,101.48 43 97.77 267.25 59 26.66 34.31 28 164.44 1,012.78 44 93.33 242.48 60 22.22 27.39 29 160.00 930.87 45 88.88 219.61 61 17.77 21.01 30 155.56 855.25 46 84.44 198.49 62 13.33 15.11 31 151.11 785.42 47 80.00 179.00 63 8.88 9.67 32 146.67 720.94 48 75.55 160.99 64 4.44 4.64 33 142.22 661.40 49 71.11 144.37

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ALL LOANS INSURANCE PACKAGE

All Loans Insurance Package is an innovation of the Loan

Redemption Fund (LRF) to give total loan protection to its

members-borrowers and also to give protection to the

CARD MBA’s accredited lending institutions by ensuring

100% collection of loans extended in case of death of the

member-borrower.

The ordinary LRF pays only the balance of the loan but with

1.5% of the principal amount of loan as contribution, the

program pays the principal amount of loan of the dead

member-borrower.

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REFUND OF CONTRIBUTION

Upon resignation before the age 65 after three (3) years

of continuous membership, the member is entitled to

fifty (50) percent

refund of all the contributions made

for Life Insurance less claims availed of and

100 %

of all contributions made for

Provident/Retirement Fund plus regular savings

interest.

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B O A R D O F T R U S T E E S B O A R D O F A D V I S E R S P R E S I D E N T G E N E R A L M A N A G E R A S S T . M A N A G E R F O R O P E R A T I O N A S S T . M A N A G E R F O R A D M I N & F I N A N C E U N D E R W R I T I N G F U N C T I O N S C L A I M S F U N C T I O N S P R O V I N C I A L O F F I C E S A D M I N I S T R A T I V E & F I N A N C E F U N C T I O N S P R O M O T I O N S & U N D E R W R I T I N G O F F I C E R C L A I M S S E T T L E M E N T O F F I C E R P R O V I N C I A L M A N A G E R A D M I N & F I N A N C E O F F I C E R I N S U R A N C E P R O C E S S O R C L A I M S A D J U S T E R I n s u r a n c e U n d e r w r ite r I n s u r a n c e P r o c e s s o r B O O K K E E P E R M B A C O O R D I N A T O R S M B A C O O R D I N A T O R S

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CARD MBA Profitability 2000-2004

(in US Dollars)

$38,188.75 $235,947.15 $404,415.57 $278,449.91 0.00 50,0 00.0 0 100, 000. 00 150, 000. 00 200, 000 .00 250, 000. 00 300, 000. 00 350, 000. 00 400, 000 .00 450, 000 .00 Year 2001 Year 2002 Year 2003 Year 2004

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Surveys showed that the products and services

of CARD MBA have been rated as number one in

terms of clients’ satisfaction.

CARD MBA has been able to meet a specific

demand of client-members for insurance in case

of death to cover burial expenses, to repay the

loan in case of death of a member-borrower, and

provident fund or retirement savings for old age.

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More poor families joined CARD Program.

Empowering the poor and better

governance since they owned MBA.

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“The products of the CARD MBA are innovative in

that they meet the demand for micro-insurance of poor

households in relatively large numbers. It is focused on

helping poor families cope with risk factors associated

with death, total and permanent disability and old age.

The Association’s experience shows that micro-insurance

can be a viable undertaking provided there is a critical

mass of clients and adequate resources that could meet

pooled risks. Micro-insurance is relatively new to the

Philippine micro-finance sector, and CARD MBA is a

trail-blazer.”

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