Microinsurance gets rolling in rural areas

Manila Times – As most rural residents, which comprise a near majority of the population, are still without the benefit of insurance coverage, the potential of the micro insurance business is boundless. But what is needed is an earnest effort from both the government and the private sector for an education drive in the countryside. The Bangko Sentral ng Pilipinas (BSP) and the Insurance Commission (IC) recently released the guidelines for the provision of micro insurance through the rural banking system to take the place of mostly informal insurance schemes in rural communities.

An ironic situation exists in the country where the most vulnerable to natural calamities are the least insured. The government is mandated to provide insurance coverage to those who have the least means to obtain them but it does not have enough resources for such service, thus the need for the private sector to lead in the microinsurance market. Even counting the informal schemes such as the so-called paluwagan among mostly cooperatives, the penetration of insurance services in the rural areas is very low.

IC data showed only 13.9 percent of the population last year was covered by some form of insurance. Among the poor, only 2.9 million of the 27.6 million Filipinos below the poverty line have some form of cover for their future. Since most of the clients of rural banks are farm workers and are considered the most susceptible to weather changes—they being the most in need of ample insurance cover—banks in the countryside would be the best conduits for microinsurance.

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