Micro insurance: Reaching the Masses at Grass Root Level- The CARD MBA Experience

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Micro insurance: Reaching

the Masses at Grass Root

Level- The CARD MBA

Experience

Dr. Jaime Aristotle B. Alip

Chairman and Managing Director CARD- Mutually Reinforcing Institutions

17th_{ICDC Congress} Hotel Cinnamon Grand,

Colombo, Sri Lanka October 1, 2013

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

27.4 M families live under poverty threshold

and 1 out of 3 Filipinos is considered poor

(NSCB, 2013)



44% of the population live on less than

US$2 a day and 14% on US$1 a day or less

(WB, 2007)



The poor is vulnerable to risks, i.e, life cycle

needs and unpredictable risks such as

illness, death, theft, natural & man-made

disasters

(Llanto et al., „Microinsurance in the Phils: Policy and Regulatory Issues and Challenges,‟ 2007)

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Insurance Density (Per capita expenditure):

PhP 845.4 or US$ 18.8

 Life - PhP 620.8 or US$ 13.8

 Non-Life - PhP 224.6 or US$ 5.0

Insurance Penetration (Premiums as % of

GDP): 1.02%

Estimated Life Insurance Coverage: 13.90%

(Insurance Commission, 2009)

The Poor has Limited

Access to Insurance

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Sharing with you the CARD story…

• _{CARD was established in December 1986}

Twenty peso bill

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CARD Mutually

Reinforcing

Institutions

“Mga Institusyon

sa iisang Misyon”

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Geographical presence of CARD MRI

Partnership Program in Hong Kong since 2007 More than 1,400 Offices all over the Philippines since 1986 Partnership Program in Indonesia since February 2008 First International NGO Office in Cambodia since 2006 Partnership Program with TYM in Vietnam since 2005 NGO office in Laos starting 2009 Partnership Program in Myanmar started 2012

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Number of Clients: 2, 045,217

Number of Insured Individuals: 8,671,300

Clients (incl. Savers): 1,934,775 Offices: 1,440

Loan Clients: 1,583,236 Total Assets: Php14.4B Loan Outstanding: Php7.3B Total Liabilities: Php10.5B Savings: Php5.3B Total Equity: Php3.81B

Repayment Rate: 99.35% Operational Sufficiency: 117.86% Staffing: 8,446 Financial Sufficiency: 113.36%

July 2013

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CARD MBA is a member of CARD

Mutually Reinforcing Institutions

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“An activity providing specific insurance, insurance-like and other similar products and services that meet the needs of the low-income sector for risk protection and relief against distress, misfortune and other contingent events.” (Regulatory Framework for Microinsurance, IMC No. 1-2010)

Basic Features:

 Simple product design ;

 Low amount of premiums/contributions;  Policy contract easily understood by clients;

 Straightforward and uncomplicated documentation;

 Frequent collection of premium/contribution that coincides

w/ the cash-flow of the insured;

 Fast and timely payment of insurance claims.

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Mission Statement…… CA RD Mu tu al Be n efi t A ssoci ati o n , In c.

to promote the welfare of marginalized sector;



and to actively involve its members in the direct

governance of the Association including formulation and implementation of policies and procedures geared towards sustainability and improved services.



to extend financial assistance to its members in the form of death benefits, health care, retirement savings, loan redemption and other non-financial services;

CARD MBA

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DEATH or

SICKNESS

Without Microinsurance…

R E S O U R C E S TIME

0 (+)

(-)

How Microinsurance Works ?

CA RD Mut ual Be nefit A ss ociatio n, In c.

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R E S O U R C E S TIME

0 (+)

(-)

How Microinsurance Works ?

CA RD Mut ual Be nefit A ss ociatio n, In c.

With Microinsurance as

SAFETY NET

.

100 K

THIS PORTION WILL BE LEFT FOR THE BENEFICIARY

DEATH or SICKNESS

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Products and Services

Continuous offering of innovative products and services to level or move ahead with the increasing competitive market of microinsurance.

1. Life Insurance Program

- Accidental Death - Hospitalization Benefit

-Motor Vehicular Accident - Refund of Contributions - Total & Permanent Disability

2. Retirement Savings Fund

 Mandatory Exit Age at 70

 Optional Retirement at ages 65, 66, 67, 68 & 69

3. Loan Redemption Fund

 Amount of benefit = Principal amount of loan

 Automatic Loan Offsetting upon Total & Permanent Disability [AUTO-LOAD]

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Products and Services

4. Package Assistance in Case of Disaster (PAID) Plan

 Personal Accident  Funeral Benefit

 Re-house (Residential Insurance)

5. Build-Operate-and-Transfer Program

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Products and Services

1. Catastrophe Reinsurance

2. Crop Insurance



_{Crop Assistance Program}

3. Health Insurance

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• CARD MRI DISASTER

RELIEF ASSISTANCE

PROGRAM

• MASS WEDDING

• SCHOLARSHIP PROGRAM

How can

mutual

insurance

live up to

its true

potential?

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17

CARD MRI’s DISASTER RELIEF ASSISTANCE

PROGRAM

Without additional

member’s contribution, relief

goods are given to all member-victims of natural disasters like:

a. Earthquakes e. Fire b. Floods f. Typhoon c. Landslide d. Volcanic eruption

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2011 1,168.190 274.118 251.680 104.131 687,934 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 2009 967,963 148.313 399.993 434.647 1,800.726 1,433,240 387.293 1,021.141 894.392 2010 1,244,547 233.895 633.848 638.195 2,676,436 4,699.197 2012 _1,583,344 _446.699 1,467.840 _1,040.426 3,709.605 THE RESULTS

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NUMBER OF INSURED INDIVIDUALS

20% 80% Contribution in the Overall Insured Filipinos Insured in other companies

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Key Success Factors

Weekly Center Meeting

► Focus on the

economically

challenged women

► “The Nanays” are our

center of existence

► Member’s

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Key Success Factors

3

If the dead body is already buried at the time

of validation and with complete documents, the

claim must be settled within three days upon

notification.

5

[

On the 5th day upon notification, all claims must be given action with finality.

Claims with incomplete documents will be given denial letter but still can be settled upon completion of required documents thru

the letter of reconsideration.

1-3-5-day Target Model in Claim’s Settlement

This Claim Settlement Model is replicated by at least ten (10) organized groups providing formal or informal microinsurance program to their member-clients

1

If the dead body is not yet buried at the time of validation, the claim must

be settled within 24 hours upon notification.

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► CARD MRI Networks

 Assist in the weekly collection thru Center Meeting

 Assist in the Information Education Campaign

► MBA Coordinators

 Assist in the claims settlement

► General Membership

CARD MBA is 100% owned by the Members

The Board of Trustees is composed of members elected by the general membership

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Key Success Factors

Culture of listening to members’ voices and

innovating to meet their needs

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► The Insurance Code of the Philippines contains provision on mutual benefit associations (MBAs) which is not present in other countries.

► Built strong relationship and continuous

collaboration with the regulators in terms of policy advocacy and enhancement of products and services that would fit the needs and demands of the marginal sector.

How can

mutual

insurance

live up to

its true

potential?

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► CARD MRI assisted in the establishment of RIMANSI so we can share our MBA

experience and together build the

microinsurance industry in the Philippines.

► And with the help of Canadian Cooperative

Association (CCA), CARD MRI and Rimansi were able to disseminate the MBA technology in Vietnam, Cambodia, Indonesia and other parts of Asia.