Rural banks and micro-insurance

Manila Times - The Rural Bankers Association of the Philippines (RBAP) has long been actively advocating for member rural banks to partner with private local insurance companies to provide needed affordable insurance products for their microfinance clients. Rural banks would act as information disseminators and collection agents of the insurers who are mostly based in urban centers and rarely venture into rural areas.

The recent signing of Republic Act 10001, which reduced taxes on life insurance premiums, paves the way for more affordable life insurance products. Under this new law, the tax rate for total premiums collected has been scaled down to 2 percent from the previous rate of 5 percent, as stated in Section 123 of the National Internal Revenue Code of 1997. The new law also provides for a revised documentary stamp tax scheme.
With the prices of life insurance policies expected to go down, more Filipinos can now afford to purchase life insurance. This supports rural banks’ venture into micro-insurance in promoting increased access to affordable and demand-driven products for rural communities where very few insurance companies are present.
This will give farmers and micro entrepreneurs that belong to the base of the economic pyramid social protection in case of a peril or tragedy. This is the proverbial rod that rural banks can hand to the poor in order for them to hold and pull themselves out of the poverty cycle they are in.

The recent signing of Republic Act 10001, which reduced taxes on life insurance premiums, paves the way for more affordable life insurance products. Under this new law, the tax rate for total premiums collected has been scaled down to 2 percent from the previous rate of 5 percent, as stated in Section 123 of the National Internal Revenue Code of 1997. The new law also provides for a revised documentary stamp tax scheme.

With the prices of life insurance policies expected to go down, more Filipinos can now afford to purchase life insurance. This supports rural banks’ venture into micro-insurance in promoting increased access to affordable and demand-driven products for rural communities where very few insurance companies are present.

This will give farmers and micro entrepreneurs that belong to the base of the economic pyramid social protection in case of a peril or tragedy. This is the proverbial rod that rural banks can hand to the poor in order for them to hold and pull themselves out of the poverty cycle they are in.

Read the complete article on Manila Times online.