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Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.
AT A GLANCE:
Microinsurance is an activity providing specific insurance, insurance-like and other similar products and services that meet the needs of the low-income sector for risk protection and relief against distress, misfortune, and other contingent events.
Microinsurance includes all forms of insurance, insurance-like, and other similar activities with the following features:
(1) Premiums, contributions, fees or charges are collected or deducted prior to the occurrence of a contingent event; and
(2) Guaranteed benefits are provided upon occurrence of a contingent event.
(Section 1, Insurance Memorandum Circular No. 001-2010)
Microinsurance Defined
Under Republic Act No. 10607 or the Insurance Code, microinsurance refers to any financial product or service that meets the risk protection needs of the poor where:
(a) The amount of premiums, contributions, fees or charges, computed on a daily basis, does not exceed five percent (5%) of the current daily minimum wage rate for non-agricultural workers in Metro Manila; and
(b) The maximum sum of guaranteed benefits is not more than five hundred (500) times of the current daily minimum wage rate for non-agricultural workers in Metro Manila. (Section 187, Insurance Code, as amended by Insurance Memorandum Circular No. 001-2010)
The Insurance Code likewise provides that no insurance company or mutual benefit association shall engage in the business of microinsurance unless it possesses all the requirements as may be prescribed by the Insurance Commissioner. (Section 188, Ibid.)
Insurance Memorandum Circular No. 001-2010 or the Regulations for the Provision of Microinsurance Products and Services defines microinsurance in the following manner:
Microinsurance is an activity providing specific insurance, insurance-like and other similar products and services that meet the needs of the low-income sector for risk protection and relief against distress, misfortune, and other contingent events.
Microinsurance includes all forms of insurance, insurance-like, and other similar activities with the following features:
(1) Premiums, contributions, fees or charges are collected or deducted prior to the occurrence of a contingent event; and
(2) Guaranteed benefits are provided upon occurrence of a contingent event. (Section 1, Insurance Memorandum Circular No. 001-2010)
Duties of Microinsurance Providers
All microinsurance providers shall ensure the following:
(1) The contract shall bear the microinsurance logo at the upper right-hand corner thereof;
(2) Contract provisions can be easily understood by the insured and printed in English and/or Filipino. In case of conflict, the contract written in English shall prevail;
(3) Documentation requirements are simple; and
(4) Manner and frequency of collection of premiums, contributions, fees, or charges coincide with the cash flows of the insured and are not onerous.
Key Features of a Microinsurance Contract
All microinsurance contracts shall clearly state the benefits and terms of coverage. The following features are applicable to microinsurance contracts:
- Coverage;
- Period of Cover;
- Risk and Contingent Events Covered;
- Terms and Conditions;
- Effectivity;
- Claims Settlement; and
- Dispute Resolution.
A microinsurance contract may cover (1) death; (2) accident and illness; (3) fire and other extended perils; (4) calamities, disasters, catastrophic events; (5) casualty; and (6) other contingent events as may be determined by the concerned regulator.
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Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries regarding taxation and taxpayer’s remedies, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/0917-5772207.
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