Insuring sustainable development

The World Risk Index 2025 report ranks the Philippines no. 1 in exposure to natural hazards, vulnerability, susceptibility, and lack of coping and adaptive capacities. Located along the Pacific typhoon belt and within the Pacific Ring of Fire, it is exposed to around 20 tropical cyclones annually, as well as frequent earthquakes and volcanic eruptions.

How can the estimated 117 million Filipinos, of whom 63% are considered micro market, cope with such daily risk exposures? In the early 2000s, microfinance provided low-income groups with suitable products and services that addressed their needs, often without collateral. But market gains would be wiped out by earthquakes, typhoons, and floods — forcing people and Micro, Small and Medium Enterprises (MSMEs) back to poverty. Additional challenges to life and health arising from such events compounded the situation. How can economic progress be sustained?

Such challenges led to microinsurance, later evolving into inclusive insurance. It protects the low-income sector from daily and catastrophic risks in comprehensible terms and at affordable prices. Speedy claims settlement — the moment of truth — enables recovery soonest after an event.

Two key criticisms of microinsurance are the insufficient coverage of insured assets and the loss ratio. The reality is that if one were to provide what is deemed “enough” coverage, it would be unaffordable. The choice, therefore, between no insurance versus some affordable coverage should be a no-brainer. In Pioneer’s interactions with Haiyan victims in 2013, to date identified by the Joint Typhoon Warning Center as the strongest typhoon to ever hit land, claimants shared how they used Haiyan claim payouts (US$ 100—US$ 2,600).

When asked, beneficiaries replied that they spent them on roof repairs, funeral expenses, temporary shelter, and saving for their business or their children’s education. They regarded payouts as assistance, knowing these cannot meet every need. This market prioritises, allocates funds carefully, and optimises limited resources. While some view the sums as inadequate, for many they are enough to rebuild, recover, and resume their lives after each loss without restarting from zero.

As for the low loss ratio, an obvious option is to reduce premiums. Better thought-out alternatives include increasing sums insured, adding coverage, accepting alternative requirements, simplifying processes, and additional programmes, such as scholarships. Such unending efforts to deliver value and relevance to the customer are vital to sustain insurance in the long term — a necessity if poverty alleviation were to become a sustainable reality.

Our experience demonstrates that no testimonial to its impact is more effective than speedy claims settlement. Pioneer paid over US$9.6 million for claims arising from the Bohol earthquake and Typhoons Haiyan, Rammasun, and Hagupit in 2013 and 2014. In Leyte and Samar, the worst-hit islands by Haiyan, payouts benefited over 24,000 families. While paying claims led to a spiraling loss ratio, enrolments rose from under 1 million in 2014 to 7.8 million in 2015, then more than doubled to over 18 million in 2016. The power of timely claims payment enabled our 2,000 microinsurance agents and other frontliners to spread the word.

Two University of the Philippines scientists, B.A. Racoma and G. Bagtasa, analysed 372 landfalling storms from 1979 to 2024 and warned that typhoons are increasingly occurring later in the year. Northern storms move slower but are stronger, while those in the central and southern Philippines move faster and accelerate abruptly — making disaster response more challenging.

Claims payouts in 2025 to over 116,000 families affected by six typhoons that made landfall and two strong earthquakes, all occurring in the latter part of the year, total over US$4.65 million as of this writing. Our 17 years and 33 million enrolments (2025 estimate) are proof that microinsurance is scalable, sustainable, and enables resilience.

And yet, according to the 2024 Landscape of Microinsurance study by the Microinsurance Network (MiN), around 88% of the target population of 3 billion remains without cover. One way to expand is to double down on efforts that have worked and contributed to the 12% reach, possibly adapting them in various parts of the globe. Such is enabled by the roles of many entities in furthering the cause. The Munich Re Foundation’s commitment to inclusion dates back to 2005 in Germany, when it supported what is now known as the International Conference on Inclusive Insurance through to the one in Ecuador in 2025.

The conference gathers global experts and practitioners to advance inclusive insurance. It provides a venue to share best practices, innovative and practical solutions, learn from working models and failures, and represents various sectors, functions, and markets worldwide. It is a working example of a long-standing collaboration with the MiN.

The MiN is a unique membership-based organisation whose neutrality and convening ability bring together practitioners, regulators, donors, researchers, and multilateral organisations to exchange knowledge and, as its Strategy document states, “to achieve outcomes no single actor could achieve alone.” Its role as a bridge-builder involves “aligning global agendas with local realities, turning evidence into actionable insights.”

Each person with insurance is potentially one less person dependent on dole-outs, and one more person able to sustain the progress made. By empowering people, microinsurance can help to close the protection gap.

Lorenzo Chan, 20 March 2026