Philippines could hit 20% insurance uptake by year-end thanks to microinsurance

We’ve covered a lot of the news regarding the growth of microinsurance in the Philippines, particularly microinsurance for weather and disaster cover pilots, and the Asian country seems to be continuing to adopt insurance for low-income people quicker than many other countries.

The Philippines is particularly exposed to a range of weather extremes (such as typhoons, rainfall and flooding) and also natural disasters (such as earthquakes, volcanoes and tsunami) so it’s essential that the country encourages the population to cover themselves through the newly available microinsurance schemes. Without private cover, the Philippine government would find itself paying for reconstruction every time disaster struck, where as with microinsurance some of the burden falls on the re/insurance markets.

Of course microinsurance isn’t just about disasters and weather-index insurance, it also includes life, health, credit, auto and more. The growth of microinsurance in the Philippines has led the insurance regulator there to suggest that insurance penetration in the country could reach as much as 20% by the end of 2011.

That may seem like a low number to anyone from the west, where insurance penetration numbers often exceed 60%+, but in a still developing nation such as the Philippines this is real progress.

There is continuing investment in microinsurance in the Philippines as well which will help them achieve that percentage and grow it over coming years. Just yesterday it was announced that the Leapfrog Investments venture capital fund intends to invest $20m in a Philippine company planning further microinsurance products.

Microinsurance is going to help markets such as the Philippines become accustomed to the concept of insurance and create markets for both reinsurance and insurance companies in the area. Leapfrog have suggested that microinsurance could be a $40 billion industry in developing nations, over time that figure will grow as the population of those countries become more sophisticated financially and average wealth in the developing world grows.