Emerging Trends in Microinsurance: Prospects and Challenges

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Dr Alip, Founder and Managing Director of the Center for Agriculture and Rural Development Mutually Reinforcing Institutions (CARD MRI), presents the emerging trends in microinsurance and the challenges in the future (Jan 29, PACAP's Community Development Forum- Microfinacne amdist the Global FInancial Crisis.)

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1. Emerging Trends in Microinsurance:Prospects and Challenges Dr. Jaime Aristotle B. Alip Founder and Managing Director, CARD MRI January 29, 2009 Philippines-Australia Community Assistance Program 2. Geared Toward Reaching A Total Of One Million Members By 2009 CARD MUTUALLY REINFORCING INSTITUTIONS CARD MUTUALLYREINFORCING INSTITUTIONS (CARD MRI) as ONE 2007 2007 CARD BDS 2006 2005 1999 1997 1986 3. Partnership Program in Hongkong since 2007 More than 681 Offices all over the Philippines since1986 Partnership Program in Indonesia since February 2008 First International NGO Office in Cambodia since 2006 Partnership Program with TYM in Vietnam since 2005 Geographical presence ofCARD MRI Establish-ment of an NGO office in Laos starting 2009 4. Microfinance Industry Data No. of Poor Household- 5M Total Outreach- 2.7M - NGOs (1.6M) - RBs (0.8M) - Coops (0.3M) 20% Double Counting- 2.2M Total Outstanding loans- P16B - NGOs (P6.5B) - RBs (P8B) - Coops (P1.5B) * out of P30B MCPI, Dec 2008 5. CARD MRI Performance as of December 2008Operations Update Total No. of Clients Served for the Year849,553 (31.46% ) No. of Active Members including Savers706,890(26.18%) No. of Active Clients with Loans 684,756 (25.36%) No. of Insured Persons 3,423,780 Amount of Loans DisbursedP 8,773,800,924Amount of Loans Outstanding P 2,804,993,921(17.53% )Amount of Savings P 1,616,623,794 Repayment Rate 99.49% No. of Staff 4,102 Employees 3,659 Coordinators 443 No. of Offices 681 Branches 430Partners2 Office Units219Provincial Offices13 Head Offices 6MRI Office1 BDS Office 1Liaison Office (Cambodia)1 BOAT Partners5 Partnership Office (Vietnam) 1PT TPR-CARD (Indonesia)1 XpressMoney-CARD (Hongkong) 1 6. CARD MRI Performance as of December 2008 Financial Update Total Assets P 4,907,625,973 Total Liabilities P 3,899,029,597 Total Equity P 1,008,596,376 Operational Self-Sufficiency 116.14% Financial Self-Sufficiency105.00% Return on Assets 4.34% 7. Banks/FIs establishing Microfinance Units; and, 2.Banks/FIs establishing NGO/MFI; NGO transforming into Banks/FIs; Emerging Business Models 4.Mutually Reinforcing Institutions Approach (NGO, Bank, MBA, Training Institute). 8. * Slide from Mr. Jody dela Cruz 9. * Slide from Mr. Jody dela Cruz 10. Lack of Capital - From Non-profit to Profit Model Reasonable interest rates High dividends to investors (social and commercial investors) Financial Investment.. commercial loans, securitization, bonds Overcoming 3 Cs of Microfinance Ref: SKS Microfinances Vikram Akula interview, May 1, 2008 in India Knowledge@Wharton 11. b. Lack of Capacity - Use of best practices from the business world to scale-upmanualization, simplification, standardization (from 1,000 clients to millions) McDonalds, Jollibee, Starbucks Overcoming 3 Cs of Microfinance Ref: SKS Microfinances Vikram Akula interview, May 1, 2008 in India Knowledge@Wharton 12. c. High cost of delivering microfinance - Use of TechnologyComputerization Mobile banking (internet, cellphones) ATMs Overcoming 3 Cs of Microfinance Ref: SKS Microfinances Vikram Akula interview, May 1, 2008 in India Knowledge@Wharton 13. MFIs market saturation in urban areas - nearing perfect market Market Behavior Establishment of Credit Bureau 14. BEFORE Loans (productive, emergency) Savings / CBU (compulsory) Products / Services NOW Loans (productive, emergency, housing, non-traditional energy) Savings / CBU (flexible), remittance Agri-microfinance Microinsurance (MBA / Agent Model) Credit with Education 15. Financial Institutions Shorter loans / tenors; Cutting back on commitments; Require guarantees / higher transaction cost; and, Require hard currency loans from international funders. Global Financial Crisis 16. Clients Lower loan needs Sluggish business activitiesIncreasing number of potential clients (returning OFWs, displaced workers especially in the economic zones) Global Financial Crisis 17. MFIs Loanable funds from commercial and international funds are smaller Maintaining near perfect repayment rate of clients can be a challenge Profitability is now a challenge Global Financial Crisis 18. CONTINUOUSLY PUSHING FRONTIERS @ 20 Thank you! CARD MRI

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