Philippines
About the country
Insurance activities in the Philippines are profitable, although the sector is still relatively small when compared to countries in the region. Progress is being made on the legislative side and a further consolidation of capital requirements is underway, which is expected to stimulate growth but also to pose capitalisation challenges for some players. Filipinos are increasingly being covered by microinsurance, with a coverage at around 29%. The most prominent forms of microinsurance in the Philippines are life and health insurance. The microinsurance sector has become more competitive in recent years and its market development serves as an example for other countries in the region.
Our engagement
The ILO’s Impact Insurance Facility has actively participated in the development of the insurance market in the Philippines. Since 2008, the Facility has been involved in several projects, for example assisting rural banks wanting to mainstream microinsurance, exploring the business case for life insurance companies to offer micro products and researching the role of private actors in the offering of universal health coverage. More recently, the Facility has also invested in a more sustainable local training infrastructure, in partnership with one of the Philippines’ leading training institutes.
Our initiatives: Capacity building
The capacity building activities in the Philippines aim to translate knowledge into practical solutions as a way to develop the skills of Filipino insurers, distributors and other key players. The Facility invests in a sustainable local training infrastructure; in partnership with the Insurance Institute of Asia and the Pacific in Manila, we offer courses from our training portfolio. Upon completion of a number courses, local trainers can become ILO certified, which entitles them to further build the capacity of the Filipino insurance industry.
Our initiatives: Research and innovation
The Facility partners with a number of leading practitioners in the Philippines to design innovative strategies. We support them in implementing game-changing solutions, in addition to evaluating successful schemes in the Philippines.
The Facility supported a Pioneer Life project on financial and risk management education through a product that bundled savings with life and accident microinsurance. The project aimed to be unintimidating by providing built-in savings in “bite-sized” amounts, alongside insurance cover.
With its knowledge partner Pioneer Insurance, the Facility has explored the key growth factors that has lead Pioneer Insurance to expand its microinsurance business to issue 18 million policies by 2016. See the Case Brief dedicated to Pioneer Insurance which details the contributing growth factors.
Lessons
Health
Clients expected a private health solution to match a national one. The Filipino government is working towards universal health coverage and offers a package of health insurance and benefits called PhilHealth. Although gaps remain, it is covering increasing numbers of Filipinos and is well-known and understood in the country.
Small businesses can gain access to healthcare by pooling through online marketplaces. Small businesses find it difficult and expensive to get health insurance to cover their employees. New innovations in the form of a pooling online market place allow them access to health insurance.
Technology
Carefully planned SMS reminders can get clients to act. Research from microfinance in the Philippines has shown SMS reminders to increase savings balances. Messages that mentioned a specific saving goal (for example, saving for school fees) were particularly effective.
Claims
A focus on claims can spur growth. While a number of factors can be contributed to the growth of microinsurance programmes – such as leadership, establishment of a dedicated microinsurance team, and strong partnerships with aggregators – a focus on claims can be a crucial driving force.
Market development
Measuring the financial value of life microinsurance products is more difficult than it seems. An analysis of four products in the Philippines revealed how seemingly simple products have coverage that is, in fact, quite complex. Seemingly straightforward comparisons may prove surprisingly ambiguous.
Competition leads insurers to improve benefits and servicing. As competition increases, insurers in the Philippines are experiencing slower growth. In response, they have tried to foster customer loyalty, differentiate products, improve servicing, and reduce costs rather than only compete on price by reducing premiums.
