Micro Insurance Compilation

POWERING INNOVATIONS IN MICROFINANCE conference on microfinance July 24 - 25, 2008 * Asian Development Bank, Manila, Philippines

Edited by Foxit PDF Editor Copyright (c) by Foxit Software Company, 2004 - 2007 For Evaluation Only.

CONCURRENT WORKSHOP SESSIONS Thursday, July 24, 2008

1:30 p.m. - 3:00 p.m. Microinsurance: Service to the Most Vulnerable Sector of the Society

Auditorium Zone C

Microinsurance refers to insurance systems that offer products designed for the poor. Characteristics include simple product design, frequent and affordable premium payments, and uniform benefit packages. It aims to provide access to protection against events that affect the poor’s health and economic well-being. Typical products include life, memorial, health and property insurance, and investment instruments. Poor households, including most microfinance clients, are barely able to meet a balanced budget. Without any substantial wealth, they are just managing their daily cash flows. Lacking of any financial safety net, the poor are very vulnerable to financial impact of fortuitous events such as death, sickness, disease, disability and natural or man-made disasters. Resource speakers: Camilo Casals, Canadian Cooperative Association Business Development Advisor for RIMANSI Vener Abellera, Operations Manager, CARD MBA

Facilitator: Joseph Alaban, RIMANSI Organization for Asia and the Pacific, Inc. Documenter: Laila Garcia, RIMANSI Organization for Asia and the Pacific, Inc.

3:30 p.m. - 5:00 p.m. Microinsurance: Service to the Most Vulnerable Sector of the Society

Auditorium Zone C

(continuing session)

Microinsurance refers to insurance systems that offer products designed for the poor. Characteristics include simple product design, frequent and affordable premium payments, and uniform benefit packages. It aims to provide access to protection against events that affect the poor’s health and economic well-being. Typical products include life, memorial, health and property insurance, and investment instruments. Poor households, including most microfinance clients, are barely able to meet a balanced budget. Without any substantial wealth, they are just managing their daily cash flows. Lacking of any financial safety net, the poor are very vulnerable to financial impact of fortuitous events such as death, sickness, disease, disability and natural or man-made disasters. Resource speakers: Josie Ric Bantug, Synergy & Membership Campaign Head, RBT MBA Areli Vega, General Manager, ASKI MBA

Facilitator: Joseph Alaban, RIMANSI Organization for Asia and the Pacific, Inc. Documenter: Laila Garcia, RIMANSI Organization for Asia and the Pacific , Inc.

Expanding Access of the Poor to Risk Protection through Micro-insurance

Expanding of the Poor to Risk Protection through Micro-insurance Access

•

Working definition of micro-insurance

•

The opportunity: the enterprising poor are willing and able to participate in micro-insurance programs. They also need risk protection.

•

The business advantage: existing channels to the poor that can be harnessed for low cost transactions, risk management and education

•

Micro-insurance as a strategic option: opportunity + institutional strengths

•

Micro-insurance options

•

Making the strategy happen: mobilization, capacity building and creating a favorable policy environment

•

RIMANSI as business development support provider

Expanding Access of the Poor to Risk Protection through Micro-insurance

1. Definition Micro-insurance is a financial product/service that the poor need and are willing and able to pay for so that they are able to manage their risks better. IMC 9-2006: The term “micro-insurance” shall refer to the insurance business activity of providing specific insurance products that meet the needs of the disadvantaged for risk protection and relief against distress or misfortune. Measurement challenges: who is poor need, willingness and ability to pay risk = the probable loss arising from a financially de-stabilizing or catastrophic event

Expanding Access of the Poor to Risk Protection through Microinsurance

IMC 9-2006: A “micro-insurance product” is an insurance policy whereby: The amount of premium computed on a daily basis does not exceed ten percent (10%) of the current daily minimum wage rate for non-agricultural workers in Metro Manila; and The maximum amount of life insurance coverage is not more than five hundred (500) times the daily minimum wage rate for non-agricultural workers in Metro Manila.

Expanding Access of the Poor to Risk Protection through Micro-insurance

Implications of the definition: ¾ simple product design that clearly identifies the face amount, benefits and terms of the insurance uniformly applied to the clients; ¾ low amount of premium/contribution; ¾ policy contract is easily understood by the client/member; ¾ straightforward and uncomplicated documentation requirements; ¾ frequent collection of premium/contribution that coincides with the cash-flow of the insured; ¾ fast and timely payment of insurance claims

Expanding Access of the Poor to Risk Protection through Micro-insurance

Why micro-insurance? Poor households, including most microfinance clients, are barely able to balance financial flows, i.e., cash inflows and outflows Unpredictable catastrophic events (e.g., death, sickness, disease and disability in the family, natural and man made disasters) often push poor families over the edge of financial viability Serious social, political and moral consequences result from financial crises (loss of business, malnutrition, school drop out, civil unrest, entry into the underworld of crime, drug addiction and sexual exploitation) Children and women are the most vulnerable to these consequences

Micro-insurance: Issues, Challenges and Policy Reforms (Llanto, Almario and Gamboa).

Typology of Informal Workers U rb a n I U r b a n M ic r o E n tre p re n e u rs

II U rb a n W o rk e rs

S e lf E m p lo y e d

W age E a rn er III S m a ll F a r m e r s F is h e r s R u r a l M ic r o E n tre p re n e u rs

IV L a n d le s s R u ra l W o rk e rs & F is h w o r k e r s R u ra l

Risks faced by the poor/informal sector ¾

¾

Given the location and nature of their work, there are various work-related risks, which have a direct bearing on their social protection needs. Common risks include poor work facilities, unsanitary and cluttered surroundings, sudden changes in season or climate, calamities, pest infestations, chemical poisoning, and environmental risks.

¾ Predictable risks pertain to risks

associated with life cycle events such as pregnancy, birth, retirement or old age. Also known as life-cycle needs, these erode the financial net worth of households. In contrast, unpredictable risks are associated with illness, injury, death of a family member, natural and man-made calamities, and theft.

¾ Idiosyncratic (individual) risks ¾ Covariate risks- affect a large number of

households, which can be entire communities or regions within a country or countries. Examples: health epidemics, environmental calamities

Impact on the poor ¾ The more unpredictable the risk, the more

havoc it wreaks on the economic situation of a poor household. ¾ Thus, the poor are less likely to take advantage of growth opportunities when exposed to greater risks and uncertainty.

¾

¾

Due to increased risks and decreased ability to manage risks, many poor and near-poor households express anxiety about their perceived “vulnerability”. The degree of vulnerability depends on the characteristics of the risk, the household’s ability to respond to risk (which, in turn, depends on the household’s asset base), and time horizon.

The most at risk ¾

¾

¾

Within the informal sector, women and children are the most disadvantaged, hence, face greater risks. Women, comprising 35% of the informal sector, work for lesser paid hours than men and at the same time work longer hours in unpaid work (household chores). Children are subjected to long working hours (sometimes unpaid) and exposed to unhealthy environment and workplace hazards.

Coping mechanisms ¾ Traditional attitude of fatalism ¾ Indigenous social protection schemes, e.g.

paluwagan ¾ Institutional insurance schemes, e.g., those organized by the state– GSIS, SSS, and by commercial insurers ¾ Micro-insurance schemes

Demand for micro-insurance ¾ In general, the level of wealth, the

probability of the occurrence of risk, the severity of loss due to the occurrence of risk, and the insurance premium determine the demand for insurance of an individual

¾ However, in the case of the economically

disadvantaged segment in our society, other demand factors – perhaps more compelling than the determinants outlined above – come into play.

Other demand factors ¾ Understanding what insurance is ¾ Trusting the insurer ¾ Affordability ¾ Availability of other risk management

options, e.g., savings, credit

Commercial insurance and the poor ¾ The price of insurance that is affordable to

the poor is less than the cost at which commercial insurers are willing to supply insurance. Hence, demand may be substantially lower than anticipated.

Expanding Access of the Poor to Risk Protection through Micro-insurance

How can we help the poor integrate risk management into their financial management options and practices? + Micro-insurance services + Financial literacy + Education + Financial intermediation

Expanding Access of the Poor to Risk Protection through Micro-insurance

The business case for MFI’s to facilitate the provision of more formal insurance services to the poor

Strategic options

opportunity

differentiators

Expanding Access of the Poor to Risk Protection through Micro-insurance

The opportunity: the enterprising poor are willing and able to participate in microinsurance programs Market research in the Philippines (March, 2005 to April, 2008)

• • • • • • • •

Northern Luzon, 2005 Northern Mindanao – 2005, 2006, 2007 Southern Luzon – 2006, 2008 Metro Manila - 2005 Central Visayas – 2006 Cambodia – 2006 Vietnam – 2007 Indonesia – 2008

Expanding Access of the Poor to Risk Protection through Micro-insurance

General Findings: + microfinance clients practice risk protection through informal means. Both group and individual measures. + microfinance clients can be made to understand the concept of formal micro-insurance + general willingness to contribute esp. if managed by MFI partners + 70% to 90% definite about participating in possible microinsurance program

Expanding Access of the Poor to Risk Protection through Micro-insurance

The business advantage: existing channels to the poor that can be harnessed for low cost transactions and education

Existing microfinance distribution channels may translate into more efficient micro-insurance operations. Overheads of 15% to 20% possible

Expanding Access of the Poor to Risk Protection through Micro-insurance

The business advantage: existing channels to the poor that can be harnessed for low cost transactions and education Regular interaction with clients may translate into: + + +

Better knowledge of demand patterns Better design of insurance products Better control of collection and claims

Expanding Access of the Poor to Risk Protection through Micro-insurance

Better ability to get around the barriers to entry: Premium collection Fraud Moral hazard Adverse selection Co-Variant Risks

Expanding Access of the Poor to Risk Protection through Micro-insurance Micro-insurance as a strategic business option:

opportunity + institutional strengths

Business Differentiators

Opportunities ¾

an “invisible sector” to the insurance industry

client responsiveness ¾ efficient communication, control and service distribution channel ¾

Expanding Access of the Poor to Risk Protection through Micro-insurance

Micro-insurance options + informal and in-house schemes + partners agent relationships with commercial insurers + mutual benefit associations

Expanding Access of the Poor to Risk Protection through Micro-insurance

Options: In-house micro-insurance Plus Lower costs passed on to members ¾ May be the only choice of members ¾

Minus Small scale ¾ Fund management risk ¾ Regulatory risk ¾

Expanding Access of the Poor to Risk Protection through Micro-insurance

Options: MFI as agent Plus ¾ Commissions earned ¾ Much simpler ¾ Less risk

Minus ¾ Client perceptions re: commissions ¾ Potential conflict of interest in claims settlement ¾ Performance risk ¾ Less responsive than other approaches

Expanding Access of the Poor to Risk Protection through Micro-insurance

Options: Mutual Benefit Associations Minus

Plus ¾ Customized products ¾ Responsiveness to members ¾ Good leverage of synergies with MFI

¾ ¾ ¾

Business risk Insurance risk Performance risk

Mutual Benefit Associations as Micro-insurance Providers

How are mutual associations recognized in the Philippines? The insurance code under Sec 391 recognizes a mutual benefit association as “… any society, association or corporation without capital stock, formed or organized not for profit but mainly for the purpose of paying sick benefits to members, or furnishing financial support to members while out of employment, or of paying to relatives of deceased members …..”

Expanding Access of the Poor to Risk Protection through Micro-insurance

Making the MBA option happen: 1. 2. 3.

Mobilization Operational effectiveness and efficiency Policy Advocacy

Expanding Access of the Poor to Risk Protection through Micro-insurance

1. Making it happen: Mobilization Needs assessment Interim staffing Market research Actuarial analysis Business planning Operations training Systems installation PMES/MES MBA Coordinator selection and training Board election and training Completion of registration process

Expanding Access of the Poor to Risk Protection through Micro-insurance

2. Making it happen: Achieve sustainability through effective and efficient performance in key result areas: Promotions Collection of Premiums Claims Processing and Payment Record of financial transactions Record of insurance events (MIS) Fund management Governance Management Audit Product and Market Development Member/Client Satisfaction

Expanding Access of the Poor to Risk Protection through Micro-insurance

3. Making the it happen: Influencing the policy environment + set performance standards for the sector + generate awareness and compliance with sector standards + provide policy incentives and support for good performance + ensure a level playing field for MBAs

Regulating Mutual Benefit Associations and Insurance Cooperatives Insurance Commission issued IMC 9-2006, October 25, 2006 •

refers to the insurance business activity of providing specific insurance products that meet the needs of the disadvantaged for risk protection and relief against distress or misfortune

•

premium computed on a daily basis does not exceed ten percent (10%) of the current daily minimum wage rate for non-agricultural workers in Metro Manila (P313.00-P350.00 from DOLE website); and

•

maximum amount of life insurance coverage is not more than five hundred (500) times the daily minimum wage rate for non-agricultural workers in Metro Manila.

• •

Initial guaranty fund: P5,000,000.00 (US$ 116,280) Every year thereafter, all micro-insurance MBA’s must increase their Guaranty Fund by an amount equivalent to five percent (5%) of their gross premium collections until the Guaranty Fund shall reach twelve and a half percent (12.5%) of the required capital for domestic life insurance companies.

Expanding Access of the Poor to Risk Protection through Micro-insurance

RIMANSI as business development support provider Value Added: Catalyst to facilitate and support efforts of MFIs/MBAs to provide better access by the poor to micro-insurance products and services Mechanism for risk pooling and cost sharing Forum for performance based monitoring and evaluation Advocate for policy reform

PHILIPPINES - 6 licensed MBA partners

- 5 with MBA partnership

- 4 in the pipeline

Expanding Access of the Poor to Risk Protection through Micro-insurance

RIMANSI as business development support provider

Mission Statement We are a resource center than develops and offers risk management solutions to mutual benefit associations in order to strengthen their capacity to provide risk protection services on a sustainable basis.

Expanding Access of the Poor to Risk Protection through Micro-insurance

RIMANSI as business development support provider Business Objectives 1. Assist the partner-MFIs establish their own MBAs. 2. Design and formulate appropriate micro insurance products for the poor. 3. Formulate and promote Performance Standards aligned with international best practices. 4. Promote mutual assistance and sharing of resources, technology and information among stakeholder. 5. Build the financial infrastructure for micro-insurance through research, education and policy advocacy.

Expanding Access of the Poor to Risk Protection through Micro-insurance

RIMANSI as business development support provider Services Package 1: ¾ Market research ¾ Where applicable, conversion of in-house insurance programs into formal and professionally run MBAs. ¾ business planning. ¾ Registration with the SEC and Insurance Commission (IC) and obtain license to operate from I.C. ¾ Conduct of actuarial study. ¾ Installation of simple MIS ¾ Assist newly established MBAs during initial two (2) months.

Expanding Access of the Poor to Risk Protection through Micro-insurance

RIMANSI as business development support provider Service Package 2 ¾ ¾ ¾ ¾ ¾

strategic business planning new product development (life insurance variants, non-life, health, education, savings features) performance monitoring and independent audit improvement of product features member satisfaction surveys and service improvement

Expanding Access of the Poor to Risk Protection through Micro-insurance

RIMANSI as business development support provider Service Package 2 ¾ ¾ ¾ ¾ ¾

upgrade of MIS and accounting systems monitoring adequacy of actuarial reserves management training asset/liability management management of investment portfolios and actuarial reserves

Elements of Micro-insurance Sector Growth and Development: Internal Dynamics Market – member satisfaction Balanced sector growth Competence of managers and professionals

Policy and Regulation

Passion of social entrepreneurs/ leaders

CARD MBA

CARD Mutual Benefit Association, Inc.

Why Microinsurance ? MICROINSURANCE is another WEAPON for poverty alleviation. MICROINSURANCE is a SAFETY NET for micro-entrepreneurs. MICROINSURANCE complements the microfinance operations Some commercial insurance companies are biased to micro-entrepreneurs because of the size of THEIR BUSINESS. “ If the goal of microfinance is putting money in people’s pocket, the goal of microinsurance is putting tranquility in people’s hearts at time of crisis ” AM Dimaculangan

CARD Mutual Benefit Association, Inc.

Why Microinsurance? INCOME FROM MICROCREDIT

K A E

E H T

BR N Y T A C ER E V C O N P A F R O U NS CLE I O Y R C FUNERAL C MI DEATH HOSPITAL MEDICAL EXPENSES

SICKNESS DISABILITY

CYCLE OFFROM POVERTY CAUSED BY MISFORTUNE INCOME MICROCREDIT REMAINS !!!

CARD Mutual Benefit Association, Inc.

Our Value Proposition ……

“ TODO-TODONG BENEPISYO AT PAGLAKI NG PONDO AY KAYANG-KAYA KUNG TAYO AY SAMA-SAMA”

TRANSLATION: Giving all types of benefit to the members and increasing the fund … can easily be done if we work and stay together….

Products and Services… CARD Mutual Benefit Association, Inc.

PRODUCTS & SERVICES 1.

LIFE INSURANCE PROGRAM with the following features: 1.1. Accidental Death 1.2. Total & Permanent Disability 1.3. Motor Vehicle Accidental Hospitalization (MVAH) benefit 1.4. Refund of Contributions

2.

RETIREMENT SAVINGS FUND with special feature of contribution refund

3.

ALL LOANS INSURANCE PACKAGE with Automatic Loan

4.

REFUND OF CONTRIBUTION

Offsetting After Disability (Auto-LOAD)

NON-FINANCIAL SERVICES 1. 2. 3.

Mass Wedding CARD Disaster Relief Assistance Program Credit Bureau

STANDARD OPERATING PROCEDURES OF RUNNING A MICROINSURANCE SCHEME (CARD MBA Context)

Cape Town, South Africa (05-06-07)

CARD Mutual Benefit Association, Inc.

CARD MBA’s SOP … APPLICATION FOR MEMBERSHIP

PAYMENT OF WEEKLY CONTRIBUTION

ISSUANCE OF MEMBERSHIP CERTIFICATE

RESIGNATION / TERMINATION

DEATH / TPD

RETIREMENT

REFUND OF CONTRIBUTION

PAYMENT OF DEATH / TPD CLAIMS

PAYMENT OF RETIREMENT BENEFIT

(WITH 3 YEARS OF CONTINUOUS MEMBERSHIP)

CARD Mutual Benefit Association, Inc.

Claims Settlement … 1-3-5-day Target in Claim’s Settlement

1

3 Within three days upon notification & with complete documents, claim for indemnity must be settled if the dead body is already buried at the time of validation.

Within 24 hours upon notification, claim for indemnity must be settled if the dead body is not yet buried at the time of validation.

5 Within five days upon notification, difficult claims will be given action with finality.

BOAT PROGRAM

CARD Mutual Benefit Association, Inc.

Build Operate And Transfer Program

1. Are you willing to provide microinsurance products to your members ?

YES

2. Do you have Php 5 million for guarantee fund? NONE 3. Do you have the capacity to run your own microinsurance program?

NONE

Get into the BOAT of CARD MBA…

CARD Mutual Benefit Association, Inc.

Build Operate And Transfer Program

VALUE PROPOSITIONS of the BOAT PROGRAM 1. MEMBERSHIP The members of BOAT Partner will be members of CARD MBA enjoying the same benefits that of CARD members. 2. PERIOD OF ENGAGEMENT: THREE YEARS During the 3-year period, there will be technical assistance and transfer of technology in the management of a mutual benefit association. 3. DISENGAGEMENT After three (3) years, all those entitled for the refund of contribution will be turned over to the BOAT partner’s own MBA together with their refund of contribution to become their seed capital.

The The BOAT BOAT Framework Framework ASSESSMENT & MONITORING

CARD MBA PRESENTATION

PARTNERSHIP

ASSESSMENT OF BRANCH & CENTER ACTIVITIES

TRAINING of the MANAGEMENT TEAM and MOA SIGNING

FINALIZATION of IMPLEMENTING RULES

DEVELOPMENT of IMPLEMENTING RULES and FINALIZATION of MOA

WORK PLAN and PRO-FORMA MOA REVIEW

MRI

“Get into the BOAT of CARD MBA”

CARD MBA

“Get into the BOAT of CARD MBA”

E.Z. FOUNDATION (BANCO NG MASA)

USWAG

QUIDAN – PI

KFI

THE BOAT PARTNERS

“Assisting people in coping with uncertainties…”

CARD MRI Insurance Agency

CaMIA…

1. Established in June 15, 2007 and was registered with Securities and Exchange Commission on August 2, 2007 with its own separate Board of Directors. 2. The main objectives of the Agency are:

# To

conceptualize microinsurance products as needed by the members of CARD MRI and its affiliates.

# To

serve the identified insurance needs of CARD MRI and its affiliates thru partnership with various insurance companies.

CaMIA PAID Plan…

CARD MRI Insurance Agency

CaMIA Packaged Assistance In case of Disaster Plan

(CaMIA PAID Plan) “If misfortune befell upon you, consider your claim PAID”

3-in-1 Insurance Package

CARD MRI Insurance Agency

CaMIA PAID Plan…

Benefit 1 PERSONAL ACCIDENT up to Php 100,000.00 IF ACCIDENT RESULTED TO

AMOUNT OF BENEFIT

Death

Php 100,000.00

Loss of both hands or both feet or sight of both eyes

Php 100,000.00

Loss of one hand and sight of one eye

Php 100,000.00

Loss of one foot and sight of one eye

Php 100,000.00

Loss of one hand and one foot

Php 100,000.00

Loss of one hand OR one foot

Php 50,000.00

Loss of sight of one eye

Php 50,000.00

CARD MRI Insurance Agency

CaMIA PAID Plan…

Benefit 2 FUNERAL BENEFIT of Php 20,000.00 NUMBER OF CONTINUOUS YEARS INSURED

LESS THAN ONE YEAR

CAUSE OF DEATH Pre-existing condition

NONE

Suicide

NONE

Accident

Php 20,000.00

Sickness (not pre-existing)

Php 20,000.00

Suicide ONE YEAR BUT LESS THAN TWO YEARS

TWO YEARS AND ABOVE

AMOUNT OF BENEFIT

NONE

Accident

Php 20,000.00

Sickness

Php 20,000.00

Suicide

Php 20,000.00

Accident

Php 20,000.00

Sickness

Php 20,000.00

CARD MRI Insurance Agency

CaMIA PAID Plan…

Benefit 3 RESIDENTIAL HOUSE RECONSTRUCTION START-UP CAPITAL up to Php 10,000.00 CAUSE OF DAMAGE

AMOUNT OF BENEFIT

FIRE

Depends on the percent of damage but not more than Php 10,000.00

Natural Calamities such as FLOOD, EARTHQUAKE, TYPHOON and VOLCANIC ERUPTION

Depends on the percent of damage but not more than Php 10,000.00 with Php 500.00 deductible

Sample of CaMIA PAID Plan Certificate of Coverage - This portion will be given to the insured as proof of payment and coverage

Return Stub - This portion will be returned to CaMIA/CARD MBA upon completion

Coverage of the PAID Plan

Php 250.00 Period of Coverage: One (1) Year

CARD MRI Insurance Agency

Annual Premium:

(renewable yearly)

Eligibility:

18 to 60 years old

Effectivity:

9 The Certificate of Coverage (CoC) should be completely filled-out together with the signature of the insured. 9 The CoC will take effect upon submission of the Return Stub to the CaMIA Head Office or to the nearest CARD MBA Provincial Office.

CARD MRI Insurance Agency

Operations Update as of May 31, 2008

PARTICULARS No. of Plan Sold

2007-08 Beg. balance

2008 (April - May)

TOTAL Year to Date

5,249

6,583

11,832

Gross Premiums

1,312,250.00

1,645,750.00

2,958,000.00

Commission: PAID Plan

65,888.75

193,170.91

259,059.66

Total Assets

800,801.07

1,608,306.35

1,608,306.35

Net Income (Loss)

126, 405.68

238,392.09

364,797.77

3

78

81

190,000.00

285,800.00

475,800.00

No. of Claim Amount of Claim

History and Institutional Background A short glimpse on the history of Rural Bank of Talisayan will enable us to understand RBT-Mutual Benefit Association beginnings.

It was during the 1965 Christmas party at the municipal hall of Talisayan, attended by local officials and some guests from Manila when the late Reserved Colonel Alejandro Go Beltran Sr. asked the town mayor on how he can be of help to the people of Talisayan. The town mayor candidly and quickly replied, “ Why not establish a rural bank?” Fortunately, during that time, the Central Bank of the Philippines was promoting a new banking system in order to develop the countryside wherein each town must have its own bank. By March 10 of the following year, the said aspiration of the town mayor became a reality; “Rural Bank of Talisayan” was established. Since its inception, the bank’s priority is the upliftment of the quality of life of the less privileged sector of the society. It aims to empower people from all walks of life. It initially directed its focus on providing financial assistance to the coconut farmers and fisher folks. The bank struggled and survived economic difficulties during the dark days of the Philippines.

BRIEF HISTORY OF RBT

“The best way to predict the future is to INVENT it”

1

SUSTAINING STAGE (1966-1975)

The main concern was on sustaining the operations with only 2.7 million assets and reaching out to the target communities. The founders braved all unfavorable conditions just to bring the good news to the needy people.

BRIEF HISTORY OF RBT

“The best way to predict the future is to INVENT it”

2

SURVIVAL STAGE (1976-1985)

This decade marked the dark years of our country’s history. With Martial Law in enforcement and with an economy that was not promising, the bank steadily continued to be resilient bringing in more assets to 6.6 million.

BRIEF HISTORY OF RBT

“The best way to predict the future is to INVENT it”

3

INNOVATIVE STAGE (1986-1995)

The rural banking system continued to survive and introduced more innovations in products and services. Assets reach 23 M and Loan portfolio of 17.5 M

BRIEF HISTORY OF RBT

“The best way to predict the future is to INVENT it”

4

EXPANSION STAGE (1996-2005)

It is in this stage that RBT expanded its operations as evidenced by the branches that were set up in Jasaan and Salay, all in Misamis Oriental. The current assets have reached to 158 million, total loan portfolio of 111 M and has a workforce of more than 108 personnel as of December 2004.

4

EXPANSION STAGE (1996-2005)

From the traditional agricultural lending assistance to farmers, fisher folks, and employees of government and private sectors, RBT ventured into microfinance banking in 1998 extending loans to small and micro entrepreneurs particularly, women in partnership with the PCFC. It replicates the Grameen banking approach coupled with MABS technical assistance for individual lending.

BRIEF HISTORY OF RBT

“The best way to predict the future is to INVENT it”

5

QUANTUM LEAP STAGE (2006-2015)

The era of modern management using the information technology, opened the gates to global market thereby creating a borderless economy. The issue of bigness and diversification is our greatest challenge for our survival.

MSO COORDINATING FUNCTION Cooperation is Christianity in Action

RBT BANK

Towards one

VISION RBT MBA

MSO RBT COOP

AGB

To make its member organizations top players in each’ own field, providing the needed products & services to clients and members for the wholistic upliftment of the community through a unified and cohesive operation.

RBT-Mutual Benefit Association Milestones „

„

„

„

„

January 2, 2006 – Launching of RBT-Mutual Benefit Association July 5, 2006 – RBT-MBA was officially registered with the SEC. September 16, 2006 – RBT-MBA was License by the Insurance Commission. March 10, 2007 – RBT-MBA 1st Annual General Assembly. August 2007 – RBT-MBA reached the 10,000 members.

RBT – MUTUAL BENEFIT ASSOCIATION, INC. Report on Membership and Claims for the year 2006 to June 2008 “To deliver quality micro insurance products and services to in need Filipino families”

VISION To deliver quality Microinsurance Products and Services to in need Filipino Families.

MISSION “ A top Microinsurance provider in the Philippines”

18000 15400

16000 14000

12490

12000 10000 8000

6723

6000 4000 2000 0 2006

2007

2008

CLAIMS PAID ON LIFE INSURANCE (in thousand Php)

329,000.00

350,000.00 300,000.00

224,000.00

250,000.00 200,000.00 150,000.00 100,000.00

70,500.00

50,000.00 0.00 2006

2007

2008

NUMBER OF CLAIMS ON LIFE INSURANCE 2006

1

2

6

Member

Spouse

Children

NUMBER OF CLAIMS ON LIFE INSURANCE 2007

5

6 28

Member

Spouse

Children

NUMBER OF CLAIMS ON LIFE INSURANCE as of June 2008

5

5 17

Member

Spouse

Children

CLAIMS PAID ON MEDICAL REIMBURSEMENT (in thousand Php)

350,000.00 289,424.90

300,000.00 250,000.00

176,208.00

200,000.00 150,000.00

103,359.00

100,000.00 50,000.00 0.00 2006

2007

2008

NUMBER OF CLAIMS ON MEDICAL REIMBURSEMENT 2006

23 64 17

Member

Spouse

Children

NUMBER OF CLAIMS ON MEDICAL REIMBURSEMENT 2007

79 173 45

Member

Spouse

Children

NUMBER OF CLAIMS ON MEDICAL REIMBURSEMENT as of June 2008

67

83

38

Member

Spouse

Children

Empowering the Poor through ASKI Mutual Benefit Association

This represents the official logo of Alalay sa Kaunlaran (ASKI), Inc. wherein which ASKI MBA was born.

represents Mutual Benefit Association supporting ASKI’s vision, mission and goals. The bold letter means strength and stability as expressed in ASKI MBA’s vision: “ A highly competitive, reliable, sustainable mutual benefit association” .

ASKI MBA was established and registered in 2006

TEL.NO. (44)463-1246

EMAIL : [email protected]

Yellow expresses care for the welfare of its members Green represents hope Blue stands for the official color of ASKI

VISION A highly competitive, reliable sustainable mutual benefit association.

TEL.NO. (44)463-1246

EMAIL : [email protected]

MISSION To provide a comprehensive microinsurance program for the security of members.

TEL.NO. (44)463-1246

EMAIL : [email protected]

GOALS & OBJECTIVES ¾To promote the welfare of the poor; ¾To extend financial assistance to its members in the form of death benefits, medical subsidy, pension and loan redemption assistance;

TEL.NO. (44)463-1246

EMAIL : [email protected]

GOALS & OBJECTIVES ¾To ensure continued access to benefits/resources by actively involving the members in the direct management of the association that will include implementation of policies and procedures geared towards sustainability and improved services.

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EMAIL : [email protected]

SEC Registration ¾Registered with the Securities and Exchange Commission (SEC) ¾ Reg. No. CN200606766 ¾ June 21, 2006

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Licensed with IC ¾Licensed under the Insurance Commission (IC) ¾No. 2008-13-R

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Operations ¾Pilot operations – December 1, 2006 (Covering 1 ASKI Branch) ¾Full operations – January 1, 2007 ¾ASKI Branches covered – 9 branches

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EMAIL : [email protected]

Why Microinsurance? Why Mutual Benefit Association?

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CRGF ¾ In 1995, seeing clients’ needs in times of sickness, ASKI, through its Credit Risk Guarantee Fund (CRGF), started giving financial assistance to its clients for their hospitalization and medical expenses ¾ Php500 (US$10) - Php1,000 (US$20)

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MAF Program ¾ Mutual Aid Fund Program introduced in 1999 ¾ Recognizing that CRGF financial assistance is not sufficient as a response to the difficulties encountered by the clients and their families in time of death and/or serious illness ¾ In order to mitigate the risk of accounts becoming uncollectible due to death and disability

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MAF Program ¾Benefits: ¾Death of Member – Php120,000 (US$3,000 ) ¾Death of Spouse/Child – Php60,000 (US$1,500 )

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MAF Program Facing Risk ¾ The MAF Program, however, though was able to lessen the credit risk of the Organization and improve client serve was faced with another risk ¾ … the risk of exhausting its program fund

and not being able to pay for the benefits due to its clients

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MAF Program Facing Risk ¾ MAF program did not undergo formal actuarial study ¾ MAF program does not have a guaranty fund that will ensure payment of benefits

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New MAF Program ¾ Thus, in 2000, ASKI, recognized for its “microfinance plus” programs introduced the New MAF under the group life insurance with an external commercial insurance provider ¾ The New MAF was intended as a transitory program …for the Mutual Benefit Association

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EMAIL : [email protected]

ASKI MBA ¾In 2005, ¾ ASKI, as an incorporator, joined other microfinance institutions (MFIs) in organizing RIMANSI ¾RIMANSI through the support of CARD

MBA and CCA, conducted an actuarial study on the potentials of ASKI MBA

¾ In 2006, ASKI MBA was born.

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EMAIL : [email protected]

ASKI’s Triple Bottom Line ¾ Having an MBA was a move to attain the triple bottom line, that is

outreac viability h transformatio n TEL.NO. (44)463-1246

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Outreach ¾ Affordable premium attracts more

clients/cater to the unserved portion of the poor

¾ As of June 30, 2008 ¾ Members – 19,140 ¾ Insured members of the family - 76,000 (approx.)

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Affordable premium contributions Membership fees “One-time” Php 300 (US$7.50)

Weekly contribution Php 30 (US$0.75)

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Viability ¾ Viability ensured… ¾undergone actuarial study ¾regulated by the Insurance Commission (IC) ¾Guaranty fund deposited at IC

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Highlights of Operations Revenues and expenses 11 .6

14.0 12.0

Underwriting income

8.0

Underwriting expense

6. 1

7. 1

10.0

Operating expenses

2.0

5 0.

Net income 2. 3

3. 8

3. 7 9 1.

2. 1

1. 5

4.0

4. 1

6.0

1 1.

0.0 JUNE 2007

DEC 2007

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JUNE 2008

Highlights of Operations 13 .7

16.0

Financial Position

14.0 12.0

2 8.

8. 6

10.0

Assets

Liabilities

8.0

4.0

5. 5

4 5.

Members Equity 3. 2

6.0

2.0 0.0 DEC 2007

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EMAIL : [email protected]

JUNE 2008

Transformation ¾ Products designed to cater to the needs of

the clients based on a survey and actuarial study ¾ Benefits acts as a safety net for the clients and their families in time of loss

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Transformation ¾Income flows back to members in

form of improved benefit package ASKI MBA

Benefits

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Attractive Benefit Package ASKI MBA

Member - Death & TPD Php 120,000 (US$ 3,000)

ASKI MBA ASKI MBA

Spouse – Death Php 20,000 (US$ 500)

3 legitimate children - death Php 10,000

Equity Refund = 50% of total premium contributions

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EMAIL : [email protected]

Transformation ¾ Income flows back to members in form of capacity building

Microinsurance Lakbay Aral (Exposure Training– CARD MBA TEL.NO. (44)463-1246

EMAIL : [email protected]

Microinsurance Forum

MBA Coordinators Training TEL.NO. (44)463-1246

EMAIL : [email protected]

Transformation ¾ Clients own and manage the MBA (clients in ASKI MBA Board of Trustees)

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Transformation Empowerment of the poor ¾ ASKI MBA Board of Trustees trained on board governance, leadership, microinsurance operations ¾ Clients equipped and can participate in the policy and decision-making of their own MBA ¾ Clients elected as MBA Coordinators ¾ Clients contribute something to the community by ensuring a well-managed and client-sensitive microinsurance program. ¾ Thus, we can say that ASKI MBA truly is a venue to empower the poor. TEL.NO. (44)463-1246

EMAIL : [email protected]

Main Strategy-MOA with ASKI ¾ASKI as Advisory ¾Management services ¾ASKI as marketing & collection agent

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Joys First year of operation ¾ Setting-up of operational policies and procedures ¾ Initial design and pilot-testing of automated MIS ¾ Support from partners – ASKI and RIMANSI ¾ Attaining positive result of operations in the first year

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Challenges and Current Initiatives ¾Increasing guaranty fund ¾Finalization and installation of MIS ¾Expansion of program

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Thank you! ASKI MBA 2007

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