MR Microinsurance_2012_03_29.indd - International Labour ...

Improving client value
costly and quite responsive, especially when compared to the same arrangements
in Kenya.
The fact that the life microinsurance products reviewed add value in
the Philippines therefore merits attention, as it is hard to provide better value
than the informal practice of abuloy. 8 In fact, the origins of microinsurance
in the Philippines comes from the formalization of abuloy by some
cooperatives that required members to contribute ex-ante PHP 2 to PHP 5
(US$0.04 to US$0.11) per month for a death benefit of PHP 20 to 35 000
(US$444 to US$777), which is close to the price people paid to be part
of abuloy. As regulated MBAs such as CARD and FICCO emerged, they
then built on the cooperatives’ semi-formal schemes and fully formalized
them.
All four products reviewed score almost the same on the four core dimensions
of the PACE framework. As described in section 15.2, the products have
various strengths and weaknesses, but offer good cover and service at a reasonable
price. According to Rimansi (2002) the price is within the willingness-topay
range declared by low-income households. There remains concern over
value for money as all of the products are very profitable, suggesting that there
is an opportunity to raise benefits or reduce premiums.
It is interesting to see such a convergence in an environment where there is
not much competition, since most of the insurers (especially those that are
member-based associations) serve captive markets. However, with increased
activity by CLIMBS and the recent entry of MicroEnsure, competition has
begun and the clients seem to have benefited. The life products in the
Philippines built on informal mechanisms and have continued improving their
features to provide better value, providing evidence that maturity does matter
and that client value improves over time. There are still improvements to be
made and with increased competition there should be further benefit to the
client.
8 Within damayan, a broader term for community support, relatives and friends contribute abuloy
(informal support for funeral) to a family who lost a member.
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