Price Transparency and Microfinance Related Regulations
MEFIN_Microinsurance through Rural Banks
1. A presentation for MEFIN
July 14, 2016
Partner-Agent Model:
Country Builders Bank
2. Discussion Framework
Background – Rural Bank Industry
Evolution of Microinsurance in Rural Banks
Landmark regulatory policies for
microinsurance
RBAP Strategy and Milestones
The Case of Country Builders Bank
3. Rural Banks in the Philippines
Rural
Banking
Act of
1952
The RBAP
was
founded
in 1955 by
18 rural
banks
Rural
Banks Act
of 1992
Consolida
tion
program
for rural
banks
began in
2010
Republic
Act 10574
or the
“Foreign
Equity
Bill”
490 rural banks
as of April 2016
18 rural banks
established
The number of
RBs peaked at 711
4. The Rural Bankers Association of the Philippines
Rural Bankers
Association of the
Philippines (RBAP)
Rural Bankers
Research and
Development
Foundation, Inc.
(RBRDFI)
Luzon
Federations
Visayas
Federations
Mindanao
Federations
Member–Rural Banks
5. Loan Redemption
Insurance or Credit Life
(to guarantee loans)
Mutual
Mortuary Fund
(to offer value-
added services)
Group Term Life
Insurance
(to increase regulatory
compliance)
MI Agent /
Broker License
(to be more
responsible and
effective)
Loans and Deposits
(to provide financial services to
farmers, fisherfolks and
entrepreneurs)
INFORMAL FORMAL
6. The General Banking
Act prohibits banks to
engage in insurance
business as the
insurer
Insurance law
requires that a
license be obtained
as an agent or broker
in order to solicit
applications for
insurance and receive
commission or other
compensation
7. DEPARTMENT OF FINANCE (DOF)
National Regulatory Framework for Microinsurance 2010
Joint IC-CDA-SEC Circ. 01-2010 (Informal Microinsurance)
Joint IC-CDA-SEC Circ. 02-2010 (Treatment of Informal MI Funds)
INSURANCE COMMISSION
Insurance Memo Circular 1-2010
(Regulations for the Provision of
MI Products & Services)
Insurance Memo Circular 06-2011
(Guidelines for the Approval of MI Training Programs and
MI Licensing of Agents)
BANGKO SENTRAL NG PILIPINAS
BSP Circular 683-2010
(Marketing, Sale & Servicing of Microinsurance)
BSP Memo 15-2011
Reminder on the Proper Offering of Microinsurance
BSP Memo 27-2011
Guidance on the Implementation of 683-2010
(redefintiion of “microfinance clients”)
8. 1 - Partner with commercial insurance companies for IC
approved products either under a group or individual policy
2 - Establish membership to an IC authorized cooperative insurance
provider or Mutual Benefit Association (MBA)
3 - Gain IC authorization as an insurance provider:
(a) life or non-life insurance company, (b) coop insurance provider or (c)
Mutual Benefit Association (MBA)
9. Insurance Memo Circular 1-2010
Section 6.4. Microfinance institutions engaged in
microfinance operations may apply and be licensed
as microinsurance agent provided that:
6.4.1 A soliciting agent is identified by the institution
6.4.2 The institution sells microinsurance products
only to its microfinance clients
10. Insurance Memo Circular 6-2011
Microfinance institutions like bank and non-governmental organizations
applying for a microinsurance agent’s license shall REFLECT IN THE
PRIMARY OR SECONDARY PURPOSE TO ACT AS A
MICROINSURANCE AGENT.
A microfinance institution licensed as a microinsurance agent shall display
prominently in its premises a supplementary signage with the wordings
“A Licensed Microinsurance Agent”
11. Marketing, Sale and Servicing of Microinsurance
Products
• A rural, cooperative, or thrift bank, including its authorized
branch/es, extension office/s and other banking offices
(OBOS) can:
– present, market and sell microinsurance products as a “financial
product of an allied undertaking” (under GBL, Section 20)
– service (i.e. collect premiums and pay claims) microinsurance
products as collection and payment agents (under GBL, Section
53.3)
12. All organic documents, informational and promotional
materials used for microinsurance shall:
• Prominently display the name of the issuing insurance
provider/partner
• State the clause: “The insurance product/s of (name of issuing
insurance provider ) is/are not insured by the Philippine Deposit
Insurance Corporation and is/are not guaranteed by the (name of
the bank).”
13. Rural Bankers
Association of the
Philippines (RBAP)
Rural Bankers
Research and
Development
Foundation, Inc.
(RBRDFI)
TECHNICAL
ASSISTANCE
TRAINING LICENSING
Member–Rural Banks
Funding Support
Technical
Assistance
RBAP’S Strategy for Microinsurance
14. Microinsurance Agent Training for RBs
2days
Basic Microinsurance
Training
(with qualifying exam)
By RBAP-RBRDFI
1day
Product Mastery
Training
By Partner-Insurer
• Fundamental Concepts and
Principles of Insurance
• Difference between traditional
insurance and MICROinsurance
• Regulations on MI sales,
marketing and servicing of MI
• Effective marketing of
Microinsurance
• Microinsurance product
features
• Special coverages and riders
• Standard policy provisions
• Proper Market conduct
• Claims settlement
15. Credit Life
Death Benefits for the
principal and
dependents
Hospitalization or illness
benefits
Coverage for
Calamities/
Catastrophic events
Mobile phone-based
premium payment &
claim settlement
Deposit-linked
insurance
20. Microinsurance as a compulsory
product
Example: Microinsurance tied up with loan such
Offer microinsurance as an additional
product (voluntary)
Example: Add-on to a micro-savings account
Option to increase coverage and/or
benefits in exchange of additional
premium
Modes of Microinsurance Delivery
22. Success Stories
“Microinsurance lowers the risk
of non-payment of loan in case
the clients experience misfortune
from a loss of a family member or
their own death. Furthermore,
clients manage to stay in the
program because of the benefit
they get from MI, thus helping
RBGI achieve client retention. In
fact, drop-out rates lowered to
15% (45% in 2011 to 30% in 2012).”
RURAL BANK OF GUINOBATAN
Guinobatan, Albay
23. RANG-AY BANK
San Fernando, La Union
“In less than a year since
the product was launched
in March 2012, Rang-ay
bank has already enrolled
a total of 3,057 borrowers
and depositors and 97 of
its employees to their MI
program.”
24. COUNTRY BUILDERS BANK
Manila
“Since the MI
product launching
last September 10,
2012, CBB had
already enrolled
1,045 principal
members and their
dependents and the
number is still
rapidly growing.”
25. Country Builders Bank:
Microinsurance Experience
Completed the
microinsurance
training in July
2011
Obtained
microinsurance
agent license in
January 2012
Granted
authorization
from the
Bangko Sentral
in February
2012
Completed the
amendment of
its Articles of
Incorporation
in September
2012
