MANILA, PHILIPPINES - Japan and the Asian Development Bank (ADB) today provided a $1 million grant to the Philippines to improve access to insurance for millions of impoverished people, most of whom have no financial protection.
The grant, provided by the Japan Fund for Poverty Reduction and managed by ADB, will develop and implement guidelines and standards for an insurance service that will cater to the needs of low-income people and their families to protect them against the risk of losing their main income earners to death, illness or injury at their place of work.
At present only 3.1 million poor people in the Philippines are insured. There is a dearth of insurance providers to the poor and limited knowledge among the poor for the need to financially protect themselves against risk.
"An affordable insurance scheme for the poor would be a potent tool to shield them from uncertainty and future losses," said Eiichi Sasaki, Financial Sector Specialist of ADB's Southeast Asia Department.
The grant agreement was signed today by ADB and the Government of the Philippines. Signing for ADB was Jaseem Ahmed, Director of the Governance, Finance, and Trade Division of the Southeast Asia Department. Representing the Philippines was Finance Secretary Margarito Teves, while Kohei Noda represented the Embassy of Japan in Manila.
Insurance providers for the poor currently face difficulties in sustaining their businesses due to a lack of skills, an inefficient premium collection and weak claim processing procedures.
The project complements ADB's $150 million Microfinance Development Program Loan for the Philippines, approved in October 2005, and a $900,000 grant for the Developing Financial Cooperatives Project approved in 2006.
The National Credit Council of the Department of Finance will implement the project over a period of four years starting next month.