RBAP MI Initiative for Rural Banks
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Presents the activities and results of the RBAP MI Initiative to build capacity among rural banks for MI Agent Licensing and Distribution
RBAP MI Initiative for Rural Banks
- 1. RURAL BANKERS ASSOCIATION OF THE PHILIPPINES: ENHANCING THE CAPACITY OF RURAL BANKS AS MICROINSURANCE AGENTS BY: RUTH ASERON 7th International Microinsurance Microinsurance Coordinator Conference RBAP-MABS November 2011 Rio de Janeiro, Brazil
- 2. AGENDA Microinsurance in the Philippine context Philippine definition Common Microinsurance Products Brief description of the Rural Bank Microinsurance Market Potential size Characteristics Rural Banks as Microinsurance Agents Roles and Responsibilities of Rural Banks Advantages of RBs as MI Distribution Channels Lessons of Rural Bank MI Agents The RBAP response
- 3. Microinsurance: Philippine definition A financial product where: Premiums (computed daily) must not be more than 5% of minimum of non- agricultural wage in Metro Manila, hence premiums cannot exceed PhP 20.20 per day (US$ 0.47 daily) or PhP 505.00 per month (US$ 11.60 monthly) Guaranteed benefits are capped at no more than 500 times the same daily wage or at an annual maximum of PhP202,000 (US$ 4,700) Contracts shall clearly state benefits and terms Easily understood by insured either in English or Filipino Documentation requirements are simple Collections coincide with cash flows - MI National Regulatory Framework - Minimum daily wage as of October 2010 is at PhP 404.00 or USD 9.40 and estimated workdays in a month is 25
- 4. The Philippine Rural Banking Network Client base of 6 million Rural Banks cover 85% of municipalities (mostly in rural areas) Total branch/office network is 2,700 Total loan portfolio: PhP 98 Billion (US$ 2.3 B) Deposit base: PhP 105 billion (US$ 2.6 B)
- 5. Size of the Rural Bank Micro- Market Number Type of MF Accounts (as of December 2010) Microfinance Loans Approximately 800,000 Micro-Deposits 4,941,445 (86%) ** Estimated Household Members 15,000,000 **Source: Philippine Deposit Insurance Corporation, December 2010
- 6. The Target Market of RB Microinsurance Microfinance Borrower Microfinance Depositor Low-Income client of the Rural Bank BSP Memorandum 027-2011 redefines microfinance clients to include any existing client classified by the bank as low-income or with an average annual household income of PhP206,000 or less (USD 4,745)
- 7. Rural Bank Microinsurance Team Sales Force (microfinance account officers / field staff)
- 8. While the rural bank is a licensed agent of its microinsurance provider, its microfinance clients remain of prime importance.
- 9. Advantages of Rural Banks as MI Agents Ability to capitalize on existing operational structure for cost-efficient MI sales and servicing Compliance to both insurance and bank regulators increases their credibility as agents of MI products Enhance clients access to other relevant financial products and services Balanced recognition of MI as both a value-added client service & as a revenue-generating product
- 10. Lessons of Rural Banks as MI Agents Challenges RBAPs Response Onerous requirements and RBAP worked with the insurance and procedures make it difficult for rural banking regulators to clarify rules and banks to comply with insurance and develop a turn-key approval process bank regulations on their own RBAP acts as a better services Challenge in comparing and bureau to assist banks in selecting and deciding on the best insurance monitoring insurance partners partners to work with With the support of the USAID, ILO, and Insurance partners, RBAP was able to Need to educate bank staff & support a major nationwide training officers on microinsurance effort to educate bank personnel on management and sales microinsurance Need for more market information Facilitate access to market information for regulators, rural banks and insurance providers through dialogues and technology-based feedback mechanisms
- 11. Microinsurance Agent Training for RBs Fundamental Concepts and Microinsurance product Principles of Insurance features Difference between traditional Special coverages and riders insurance and MICROinsurance Regulations on MI sales, Standard policy provisions marketing and servicing of MI Proper Market conduct Effective marketing of Microinsurance Claims settlement
- 12. The RBAP MI Training Course Key Modules: 1. Fundamental concepts and principles of MI 2. MI Regulations in the Philippines 3. Effective Marketing of MI Training Approaches: 40 % Lecture 25 % Group Discussions 35 % Games & Simulation Exercises
- 13. GROUP DISCUSSIONS (RBAP MI Training Approaches) Allows for sharing of field lessons and practical insights Typically interactive and open Employs Case Studies
- 14. Games & Simulation Activities (RBAP MI Training Approaches) Understanding MI: Barangay Bigkis (localized Treasure Pot game) Ang MI ay parang (Microinsurance is like) Bahay-Buhay-Bagyo (house-life-typhoon) Marketing & Selling MI: The Mystery Object D-I-G Tactic (Discover Interests then Get solutions)
- 15. Results to Date (as of Oct) # of Courses held 13 # of Banks Trained 157 # of Bank Staff 297 Trained # of Banks in 45 Approval Process ) # of Banks Approved as MI 7 Agents
- 16. RBAP-RBRDFI coordinates submission of rural banks licensing requirements to the Insurance Commission and then the Bangko Sentral ng Pilipinas (BSP).
- 17. RBAP Microinsuran ce Website (Online Portal)
- 18. MI Website Find a MI Product Feature
- 19. MI Website Request Proposal Feature
- 20. Partnership Framework Rural Bankers Rural Bankers Research and Association of the Development Funding Support Philippines (RBAP) Foundation, Inc. Technical (RBRDFI) Assistance Mindanao Luzon Federation Visayas Federation Federation MemberRural Banks
- 21. RUTH ASERON Microinsurance Coordinator RBAP-MABS microinsurance@rbapmabs.org http://microinsurance.rbap.org
Editor's Notes
- Training of agents and compensation of agents Whats the difference between training of traditional agents and MI agents? More particulars on: Recruiting and selling and incentivizing and monitoring sales agents Cost-effectiveness of training agents Appointment of soliciting officers depending on how much business sense microinsurance will be Soliciting officers versus actual seller of microinsruance
- Services a consumer base of approximately 6 million, comprised mainly of the entrepreneurial poor Almost 85% of rural banks are located in the countryside The network of rural bank branches and other banking offices is more than 2 times larger than the largest commercial bank in the country with more offices in rural communities than all the commercial and thrift banks. Total loan portfolio: PhP 98 billion Deposit base: PhP 105 billion
- Discussion: WHAT ARE THE CHARACTERISTICS OF THESE CLIENTS? Microinsurance Basic Training Course Year 2011
- How does the bank make money providing microinsurance with all these staff? Microinsurance is just one of the many products that the banks offer and since they already have the infrastructure and staff in place this is not really adding any expenses. Even the microinsurance soliciting officer also handles other bank responsibilities
- Luckily most of these costs are covered by the insurance companies who provide training materials, client education materials, and take care of consumer protection support. Fees paid to the bank more than cover the minimal costs of servicing claims.
- Also add the comparison matrix screen since this is quite interesting as well
- EXPLAIN THE KEY ROLE OF RBAP IN TERMS OF WORK WITH REGULATORS