India and the Philippines are the world’s powerhouses in microinsurance. But how is the situation in the rest of Asia? What is driving the market and what are the challenges? These and many other questions are now being answered by a new study published by the Munich Re Foundation and GIZ RFPI on 3 July during the “Microinsurance Learning Session Asia and Oceania” in Manila.
The “Microinsurance Learning Session Asia and Oceania – Learning from the Landscape”, was held from 3-4 July 2014 in Manila, Philippines. It brought together over 130 microfinance and microinsurance experts and advocates and celebrated the launch of “The Landscape of Microinsurance in Asia and Oceania 2013” study report.
Microinsurance outreach in Asia and Oceania is outstanding, with the study reporting more than 170 million low-income individuals covered by microinsurance. This outreach is hardly comparable to the markets in Latin America and the Caribbean and in Africa, where previous landscape studies documented microinsurance outreach not exceeding 46 million individuals for each continent. But although the total number of individuals covered is significantly higher in Asia, the percentage of people covered in the whole continent is only 4.3%, compared with 4.4% in Africa and 7.6% in Latin America. With a coverage ratio of around 20%, the Philippines are leading in Asia. But 2013 has been a reality check for microinsurance in the country:
Lessons learnt from Haiyan Super Typhoon Haiyan (or Yolanda, as it was called in the Philippines) hit the Philippines on 8 November 2013. The latest estimates report over 60,000 people killed and nearly 2,000 still missing. In the Philippines alone, 16 million people were affected and millions of homes and businesses were destroyed. This unprecedented tragedy was also a huge challenge for the country’s microinsurance industry. The Microinsurance Network and GIZ Regulatory Framework Promotion of Pro-poor Insurance Markets (GIZ RFPI) in Asia programme undertook a joint study to understand how microinsurance services providers responded and performed in the aftermath of Typhoon Haiyan. Preliminary results of the survey on how the microinsurance industry's response impacted on the clients of these service providers were presented during the learning sessions.
Video showing how microinsurance helped families to recover from Haiyan:
Three main lessons from the aftermath of Typhoon Haiyan can already be summarised as follows. Find your customers: After such an event where simply surviving was the top priority, customers could not be expected to deal with insurance issues. It was therefore necessary to check, through clients' databases, who might have been affected and to actively approach those customers. The timelines for claims processing and documents required to make a claim were not applicable to an event of that magnitude. Where people lost everything, necessary documents were lost as well. Where people were reported missing and bodies could not be found, death certificates could not be issued. And finally, the number of claims was lower than the country’s insurance penetration had led experts to expect. This leads to the assumption that microinsurance still did not reach out to the affected region sufficiently.
The regulatory authorities and the industry jointly set up claims assistance centres. Payouts were made before the final assessment. Payout periods were extended and documentation requirements reduced, e.g. the authorities allowed the use of satellite images to assess damage. Overall, the outreach of insurance must be improved and individual insurance must certainly be embedded into large-scale disaster prevention, management and recovery strategies.
The way forward “The learning sessions were intended to use the findings of the Landscape Study of Microinsurance in Asia and Oceania as a springboard for dialogues on emerging microinsurance topics for regulators, industry representatives, donors and other microinsurance advocates”, said Dr. Antonis Malagardis, Programme Director of GIZ RFPI Asia. “The Philippine microinsurance experience following the Typhoon Haiyan tragedy, the experiences of neighbouring countries in areas such as microhealth insurance and takaful, and the upcoming integration into ASEAN in 2015 were a rich source of knowledge exchange. We expect this to inspire future collaborations and partnerships and forward actions”, he added.
“With this first study on The Landscape of Microinsurance in Asia and Oceania published by the Munich Re Foundation and the GIZ RFPI Asia programme, the blank spots in Asia on the World Map of Microinsurance are now filled”, stated Munich Re Foundation's Vice-Chairman Dirk Reinhard. He added that “the study is the continuation and complementation of the first landmark study, The Landscape of Microinsurance in the World’s 100 Poorest Countries, published in 2006, and its successor studies for Africa, Latin America and the Caribbean.”
There is still considerable scope for expanding the outreach of microinsurance. In the 31 countries evaluated by the study, the microinsurance industry expanded by 30% in terms of the number of people covered, and by 47% in terms of premiums generated, over the period from 2010 to 2012. India is the leader in microinsurance outreach, with as many as 111.1 million individuals covered. However, this 9% coverage ratio still lags behind the Philippines’ and Thailand’s 13.9%. The GIZ RFPI programme has used the findings of the study to develop its future strategy and select the target countries where the programme will work jointly with the regulator to expand microinsurance. Indonesia, Nepal, Mongolia, Thailand and Vietnam were selected as the most promising ones, according to the study. Life insurance is still the flagship product in the continent, with products for health and agriculture rapidly gaining prominence. Typhoon Haiyan in the Philippines has shown the benefits of microinsurance but also its limitations. At the same time, the joint approach of the country’s government and industry has successfully promoted microinsurance, which helped overcome some of the challenges and will hopefully act as a role model for the future of microinsurance in other regions.
-------------------------------------------------------------------------------------------------------------- The “Microinsurance Learning Session Asia and Oceania – Learning from the Landscape” was jointly organised by the GIZ Regulatory Framework Promotion of Pro poor Insurance Markets in Asia (GIZ RFPI Asia), the Microinsurance Network and the Munich Re Foundation to support insurance knowledge ahead of the tenth anniversary of the International Microinsurance Conference in Mexico this November.