DOF to push for wider insurance coverage

HOPING to change the poor person’s opinion of insurance, the Department of Finance (DOF) is seeking to institutionalize financial literacy for low-income earners by having the stakeholders take an active role.

DOF Director III Joselito Almario, who was in Cebu for a consultation with micro-finance institutions on Thursday, said most low-income earners think of insurance as a requisite for a loan.

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Others do not understand what insurance is for while those who do only remember the bad issues surrounding insurance claims.

Some also do not want to spare a chunk of their income for insurance and would rather use it to buy more food or pay for other basic services.

Almario said they want to change this perception and have low-income earners see insurance as a necessity so they will have something to fall back on in times of calamity.

He noted that only 13.92 percent of the country’s population has life insurance but in Japan, they have 99 percent coverage.

According to their records, insurance premiums only made up 1.05 percent of the GDP in 2008.

Of the 27.6 million poor Filipinos, only 2.9 million have some risk protection but about half of them are from in-house insurance schemes with no license from the Insurance Commission or any regulatory body.

The consultation was held to encourage microfinance institutions to inform their clients, most of them from low-income earners, about the benefits of having insurance.

Almario noted that out of the five services offered by microfinance institutions—credit, savings, remittances, payment transfers and insurance—only the latter is not being utilized.

The DOF hopes to include insurance in the list of services that low-income earners avail of.

Almario said that all new members of microfinance institutions are required to undergo pre-membership seminars and the concept of insurance can be introduced here.

With over 20,000 operating cooperatives registered in the country, Almario said there are roughly 250 cooperatives per province and 15 cooperatives per municipality.

And with an average of 200 members per cooperative, he said there is a potential for institutionalization during these seminars.

Aside from microfinance institutions, the DOF wants to include other stakeholders such as legislators, regulatory authorities, other national agencies, local government units, insurance providers, brokers and agents, support institutions and donors to play their roles in promoting financial literacy.