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The Philippines has been witnessing a boom in its microinsurance market over the past decade with coverage surging from a mere 3.1 million individuals before 2008 to 31.1 million by the end of 2014, according to a joint study by the International Cooperative and Mutual Insurance Federation (ICMIF) and the Microinsurance MBA Association of the Philippines (RIMANSI).
The study focused on the potential role that mutual microinsurance can play in closing the protection gap in the Philippines.
It outlined that two types of mutual microinsurance organisation exist in the Philippines: the cooperative insurance societies (CIS), which primarily have an institutional membership; and microinsurance mutual benefit associations (Mi-MBAs) which are not-for-profit organisations with low-income individuals as members.
Mutual insurance accounts for 77% of the microinsurance market. Of that figure, Mi-MBAs comprise around 51% and CISs comprise around 26%.
Figures also revealed the potential for further growth in the market. About 53% of the current microinsurance market remains untapped, and regulators continue to encourage the entry of new players. The market is estimated to expand to 73.3 million Filipinos by 2020.
However, the study also warned that mutual organizations, particularly Mi-MBAs, are faced with many challenges in the country. The report said the current market served by mutuals remains small and limited to the microfinance (credit-based) client segment. The wider market, those who are non-borrowers, are not part of the target market. It also stressed a lack of awareness and understanding of insurance in general, and microinsurance in particular, by the target market.
