PRUDENTIAL Life UK, a British insurance and mutual funds company, is building secure zones for Tacloban and Butuan residents through online communities that share microinsurance literacy and services and lifestyle trends as the rural cities search for business opportunities.
Pru Life UK partnered with Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), a federally owned enterprise supporting the German Government, and CommLinked, a marketing and sales company with major operations in Asia, to pilot online communities in Tacloban in Leyte and Butuan in Agusan del Norte for two years.
The London-based insurance company aims to draw 30,000 members in six months into microinsurance that was launched in 1997 under the National Strategy for Microfinance to protect low-income earners, including agricultural workers, from financial risks, such as natural and manmade disasters, health emergencies and economic threats.
Through the online communities, members, including children, can read and write blogs, play educational games and watch videos that tackle finances early on. Pru Life UK targets residents in the provincial barangays, where many said they want to learn more about business. A study by CommLinked said among 150 residents from each area in the cities, 33 percent said they want more investments for the future. “When we asked them what they want to read online, they said income opportunities and additional businesses, such as processing of tahong or mussels, rice, retail and small and medium businesses,” GIZ Senior Adviser Jimmy Loro said during the project launch.
“Through the online platform, we can see what people are sharing and interested in to redesign our content to make sure we become useful to the communities,” said Graham Morris, chairman of CommLinked.
A study released by Finance Undersecretary Gil S. Beltran supported the finding. The study showed microinsurance funds were primarily collected from remittances of overseas Filipino workers (OFW) who eventually become microentrepreneurs.
“OFW remittances are highly correlated with microfinance coverage [0.64 correlation ratio]. It is apparent family members of remitters eventually end up as microentrepreneurs, and the funds deposited in the banks by remitters boost the level of funds available for microlending,” he said. “However, the impact of both microfinance coverage and OFW remittances are not immediate, as they are lagged by two years.”
Indeed, striking results were seen from 2012 to 2014 when microinsurance coverage increased from 20 percent to 28.1 percent, according to Michael McCord of the Microinsurance Network whom Beltran cited in his study. Last year it further expanded to 37 million from 28 million in 2015, as national income or GDP rose consistently to 7 percent.
GIZ Program Director Dr. Antonis Malagardis sees microinsurance funds flowing to infrastructure projects in Tacloban and Butuan, cities becoming more urbanized.
“We are looking further into infrastructure and construction. We’re progressing fast, but has more to do. Private sectors are not much interested in investing in agriculture because of higher subsidies,” Malagardis said.
Thus, instead of crop investments, Malagardis suggested retail stores that different groups in barangays can access and build faster for their other basic needs.
“For example, barangays can create one-stop selling shops. So we bring education learning tools to them and the retirees who are still in good health. They would have a lot of time to contribute in a more meaningful and productive way,” Malagardis said.
Under Circular Letter 2015-54, public- and private-insurance groups are tasked to adopt and implement enhanced microinsurance regulatory framework. The Insurance Commission (IC), one of the implementing agencies among the Department of Finance, Bangko Sentral ng Pilipinas and Securities and Exchange Commission, proposes the creation of suretyship units in insurance companies. Recently, the IC established its first suretyship unit that will help draft regulations to stop the spread of fake bonds and facilitate bonds market in nonlife insurance. “Nonlife industry insurance companies are earning more from bonds, such as infrastructure bonds, but we lack a monitoring division and regulations. There are aspects in bonds that have no regulation,” Insurance Deputy Commisioner Dennis B. Funa said.
Beltran hopes financial education develops business models, linkages and relevant products and services for low-income earners to encourage them to save and the institutions to provide more credit services.