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Microinsurance Reaches 3m in the Philippines, More Expansion Predicted in Microcredit as Commercial Banks Enter Microfinance

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Wednesday, April 4, 2012

MICROCAPITAL BRIEF

» Posted by  in Category: Asia,Microinsurance at 11:12 am

According to a report attributed to the Insurance Commission of the Philippines, a government body regulating the country’s insurance industry, the microinsurance program launched in 2010 has contributed to 3.1 million Filipinos having acquired insurance coverage. The basic unified microinsurance product for health, accident, house and livelihood doesn’t charge more than 5 percent of an individual’s earnings and can provide coverage between PHP 10,000 (USD 233) and PHP 200,000 (USD 4,460). The Asian Development Bank has provided USD 1 million in funding for the microinsurance program.

The Chairman of the Insurance Commission, Emmanual F Dooc, reportedly said the goal was to cover all households below the poverty level, which includes 27 percent of the population [1]. A recent addition to the program is the new product of property and livelihood coverage in case of disaster, a service that the government will be promoting through road shows within the country.

In a recent article in Positive, an online platform for investing in microfinance and small enterprises, several factors were cited as contributing to growth potential for the microfinance market in the Philippines. These include a strong regulatory framework and commercial establishments partaking in the microfinance arena, as opposed to only cooperatives and rural banks.

The Philippines was ranked as the second best market for microfinance business environment in a recent study based on 2010 data was conducted by the Economist Intelligence Unit of London that compared 55 countries. The Filipino National Credit Council Director, Joselito Almario, reportedly argued that the Philippines would have ranked first had it not been for a low ranking in the “investment climate” category.

By Amira Berrada, Research Associate

About the Insurance Commission of the Philippines: The Insurance Commission (IC) of the Philippines was created in 1949 and is mandated by law to regulate and supervise the country’s insurance industry. Its mission is to “protect the interest and welfare of the insuring public and to develop and strengthen the insurance industry.” Specifically, its objectives are to promote the growth and financial stability of insurance companies; to maintain a minimum standard of performance for insurance companies; to educate the public about insurance; to establish a sound insurance market; and to safeguard the rights and interests of the insured. IC’s vision is that by 2020, every Filipino will have the opportunity to be covered by insurance.

About the Asian Development Bank (ADB): Established in 1966 and headquartered in Manila, the Philippines, the Asian Development Bank (ADB) is a development finance institution that consists of sixty-seven members, of which forty-eight are located in the region. ADB has three strategic priorities: to foster inclusive growth, to facilitate regional integration and to ensure environmentally sustainable growth. To accomplish these objectives, ADB uses loans, technical assistance programs, grants, equity investments and guarantees to private companies in member countries. ADB reported a total capitalization of USD 64 billion as of December 31, 2010.

IFC may lend $50 million to support Chinese microfinance market

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Microfinance Focus, February 28, 2012: International Finance Corporation (IFC) has proposed to lend $50 million to Fullerton Credit, China, to increases financial access for the underserved micro and small business enterprises and the self-employed mass market.

The loan will be extended in local currency RMB to Fullerton Credit, Sichuan, Fullerton Credit, Chongqing and Fullerton Credit, Hubei.

The three companies together with a total of 22 branches across three provinces, are each headquartered in Chengdu, Chongqing and Wuhan respectively.

They are all fully owned by AF Management Service which is incorporated in Singapore and further 100 percent owned by Fullerton Financial Holdings, a fully-owned subsidiary of the Government of Singapore’s Temasek Holdings.

IFC believes that the companies have potential to become model institutions in China in serving the MSEs with a novel business model.

IFC is providing another $15 million to Costa Rican financial cooperative COOPENAE for expanding its operations in the country. IFC’s contribution is a part of an initiative supported by the Spanish Fund for Latin America and the Caribbean that will provide advisory services to help COOPENAE identify areas for improvement in its current micro and small enterprise credit operations.