FAQ's

FREQUENTLY ASKED QUESTIONS

1. What is microinsurance?

Microinsurance basically refers to insurance products which have affordable premiums and bear the microinsurance logo (a Filipino wearing a “salakot”). The Insurance Commission has approved microinsurance products for life (such as but not limited to yearly renewable term, credit life, and personal accident plans) and non-life (such as but not limited to risk cover on property, livelihood and agriculture).

2. What are mutual benefit associations (MBAs) and how are they differentiated from Micro-MBAs?

MBAs are associations registered with the Securities and Exchange Commission (SEC) and licensed by the Insurance Commission (IC) as non-stock, non-profit organizations. They provide basic life insurance coverage to members and may provide other risk protection against contingent events such as accidents and permanent disability, out of fixed regular dues or contributions from members, subject to the approval of the IC.

Micro-MBAs are MBAs whose insurance products are all microinsurance.

3. How affordable are microinsurance products?

Let me give some examples of microinsurance products.

• A non-life microinsurance product sold at a premium of Php25 provides a 4-month personal accident coverage of Php20,000 and Php5,000 cash-aid in case of fire.

• One of the cheapest Micro-MBA contributions is Php5 weekly and this meager amount provides a maximum death coverage (if membership has been consistent for at least three years) of Php50,000 for the principal member,  Php5,000 for the spouse-dependent and Php2,500 for other eligible dependents. On top of that, if the cause of death is accident, there is an additional benefit of Php50,000 if the victim is the principal member and Php10,000 if the victim is the dependent spouse.

• For a premium of Php15, a Cooperative Society provides insurance protection for one (1) year against Accidental Death (Php5,000), Total and Permanent Disability due to Accident (Php5,000), Death due to Motorcycling Accident (Php5,000) and Accidental Death due to Drowning, Snake/Dog Bite (Php5,000). 

The above are only a few examples. Note that low premiums should not be the only consideration in buying microinsurance but its capability to address one’s specific risk protection needs. Every microinsurance provider has its own microinsurance product design, each of which follows the basic microinsurance principles of affordability, accessibility and simplicity. A person pondering to buy microinsurance should take the time to know the different microinsurance products available in the market.

4. What are Equity Savings?

Equity savings refer to at least 50% of the contribution by each MBA member which is put aside by the MBA as a sort of personal savings. When the member leaves the MBA, his equity savings will be returned to him in full, plus interest, as provided in the MBA’s Implementing Rules and Regulations (IRR).

5. Who can become a member of MBAs?

Every MBA has its own set of eligibility requirements. Usually, these are: individuals within the age bracket of 18-65, in good health condition and living an active and normal life. However, the individual has to be part of the specific market the MBA serves. For example, the main members of AFP MBAI are AFP personnel, of PPSTA MBAI are Philippine Public School Teachers, of CARD MBAI are individuals who loan from the CARD MRI (a microfinance institution), and so on and so forth.  

  

6. How can cooperatives avail of microinsurance benefits?

Cooperatives can choose from any of the following options:

1. apply for a license as an MBA, provided they meet the requirements set by the IC;
2. apply to become members of cooperative insurance societies;
3. establish affiliation with existing MBAs;
4. buy microinsurance coverage from accredited microinsurance providers

7. What are Cooperative Insurance Societies?

These are cooperatives which are engaged in the business of insuring life and property of cooperatives and their members. There are currently only two licensed cooperative insurance societies in the country – the CLIMBS Life and General Insurance Corporation (or simply, CLIMBS, which has a composite license, that is, it can provide both life and non-life products) and the Cooperative Insurance System in the Philippines (CISP).

8. Can a person have more than one microinsurance coverage?

Yes as there is no prohibition for a person to get more than one microinsurance policy to cover his risk protection needs.

9. When is an entity considered doing informal insurance or insurance-like activity? Are there sanctions or penalties for entities engaged in informal insurance?

Any entity engaged in the collection of premiums, contributions, fees or charges from members/clients for an assurance of guaranteed benefits upon occurrence of a contingent event but without any certificate of authority from the IC is considered to be doing informal insurance or insurance-like activity.

There are legal provisions that empower regulatory bodies to impose sanctions or penalties to entities engaged in informal insurance without the requisite license from the IC. The Securities Exchange Commission (SEC), Cooperative Development Authority (CDA) and the IC are collaborating to ensure that entities engaged in informal insurance and insurance-like activities are operating within the prescribed regulatory environment.

10. Will the Government provide subsidy in mainstreaming the informal insurance providers?

The Government will not provide any direct subsidy in mainstreaming informal insurance providers but may create a special regulatory space for informal insurance providers that plan to formalize their insurance and/or insurance-like activities.

11. What is the role of Local Government Units (LGUs) in microinsurance?

LGUs can support the development of the microinsurance market by collaborating with the private sector in ensuring that their local constituents have access to microinsurance. LGUs are important for the establishment of support mechanisms (e.g. linkages, information and public assistance desks, financial literacy campaigns, etc.) that will increase public awareness and access to microinsurance products and services by the low income sector. LGUs can also provide help desks to assist their constituents in choosing the right microinsurance products.

12. How can a person buying a microinsurance policy be sure that the  provider is accredited by the IC?

The person may check with the Insurance Commission (the website address is www.insurance.gov.ph) to verify if the entity offering the microinsurance product is licensed.