A Field Study of Microinsurance in the Philippines

The paper states that MFIs have unique capabilities to cost-effectively delivery microinsurance to the informal sector. The paper explores the microinsurance landscape and establishes knowledge on the regulatory framework for insurance in Philippines and uses secondary and primary data gathered through desk review, key informant interviews, survey of MSEs, and case studies. It identifies the details of microinsurance operations and the demand for insurance by micro and small enterprises (MSEs). The paper states there are three types of organisations currently providing microinsurance in the Philippines.

• MFI-owned insurance companies that offer formal insurance to small and micro entrepreneurs through their co-operative members;
• Co-operatives, which sometimes prefer to offer their own insurance products rather than serve as an agent for the MFI-owned insurers;
• NGO-MFIs that may offer insurance on their own or as an agent for an insurer.

The paper identifies and quantifies the risks and vulnerabilities of persons operating micro and small enterprises, delving into the role of insurance and non-insurance in managing the risks. The paper concludes that:

• Microinsurance complements MFIs' other interventions with MSEs because it reduces their vulnerability to business and personal risks;
• Emerging innovations need to be documented and disseminated to help the microfinance sector effectively address the needs of the informal sector;
• Microinsurance is a sustainable approach to risk management for the informal sector;
• MFIs are currently in the best position to provide microinsurance to the informal sector and should actively experiment and innovate to make the mainstreaming of microinsurance a reality.

The paper presents lessons in product design and delivery, and recommends ways to improve the quality and availability of insurance.