Monday, August 4, 2008

Alternative Insurance, Anyone?

by Freddie P. Base
Riyadh, Saudi Arabia
The heading I believe will be more interesting if I tell you the story of two employees working in the same department of an insurance company in Riyadh, Saudi Arabia. Both suffered from medical conditions which required the support of their medical insurance coverage.

Danilo Pagdanganan
Company: The National Company for Cooperative Insurance
Location: Riyadh, Saudi Arabia

Diagnosed with colon cancer
Medical Insurance coverage: SR100,000 per annum
Life Insurance Coverage: 36 months of basic salary
Died: August, 2004
Danilo's medical surgery including radiotherapy and chemotherapy had exceeded the SR100,000 per annum limit. In a very rare circumstance, the employer approved the continuity of his chemotheraphy and radiotheraphy sessions beyond the medical insurance limit. Estimated additional expenses had reached more than SR30,000 when the patient died of cancer-related complications.

Danilo's remains were repatriated to the Philippines after 21 days. This was considered by many as faster than any known repatriation recorded in Saudi Arabia. The average number of days to repatriate a cadaver takes about three months to process. The procedure is indeed time- consuming owing to the many governmental procedures one has to follow in getting the required documents and approval.
Life Insurance Benefit

Danilo's surviving wife and three adult children each received US$16,320 being the equivalent of Danilo's 36 months salary as indicated in his life insurance coverage in case of death.

OWWA Insurance Benefit

Danilo's beneficiaries received from OWWA the maximum Php100,000 being his insurance coverage in case of death.
Freddie P. Base
This is me telling you my story.
Company: The National Company for Cooperative Insurance
Location: Riyadh, Saudi Arabia

Diagnosed with Acute Myocardiac Infarction
Medical Insurance coverage: SR250,000 per annum
Life Insurance Coverage: 36 months of basic salary

Early morning of December 10, 2006, I felt a pain in my left neck while applying body lotion after a morning shower. It was a cold day and I thought I would have a stiff neck (as usual during winter) the whole day.

Getting out of the bathroom and putting my clothes on in preparation to getting to work, my stiff neck became a stab-like pain in my back just opposite my heart. I thought it was a really cold day and so I asked my house mate to rub my back with vicks vaporub.

Suddenly, I started to sweat profusely and my hands became almost numb and too weak to hold anything. I realized that I wouldn’t be able to drive myself so I asked my house mate to call our neighbor to take me to the nearest hospital.

I had the feeling that I was having a heart attack, judging from my symptoms which I had read about from the Internet. I started coughing loudly (as recommended to a person having a heart attack) and managed to guide my driver-neighbor to the nearest hospital.

The emergency room was immediately filled with doctors and nurses in seconds. The attending doctor announced my condition: Acute Myocardiac Infarction. One nurse was yelling my blood pressure at 70 over 40 while another nurse yelled that my temperature was no more than 30 celsius. I heard the doctor instructing another nurse to administer morphine. The nurse’s face was contorted and she advised me to hang on. From her looks, I told myself I was dying.

With God's blessing, I survived the ordeal. I underwent angio-plasty surgery. The medical bill cost more than US$10,000, all paid for by my medical insurance. I was discharged from the hospital after 7 days with life-time prescription of medicine worth no less than Php500 daily. Without the medical insurance coverage, which OFW will survive spending at least the equivalent of Php15k per month?

Both stories above tell you of one similarity: availment of medical insurance coverage in the country of work. While one succumbed to cancer, another lived to tell these stories. Both were recipients of a comprehensive medical insurance. I could have died without my medical insurance coverage. Both of us had the same life insurance policies. For the late Danilo, his beneficiaries were able to receive the much needed money in times of grief. With the payout, his beneficiaries have continued to live a normal life.

In contrast, there are many cases reported in the newspapers and media of OFWs who had died because they did not have the kind of insurance to cover the medical and hospital bills during confinement. Sad to say, these cases go on and on until today.

What must the OFW do? What must be done today? What is Alternative Insurance?
Group Insurance Policy

With an ordinary income, insurance premium if taken individually will cost too much for any OFW. Also, the benefits depend on how much premium is paid to the insurance company. Low premium means less benefit. More premiums paid mean more benefits.

If grouped together into a single policy, the premium cost decreases as the number of insured increases while retaining the same benefits for every member. This is called group insurance policy – a group of individuals duly insured in a single policy but having each insured receiving the same insurance benefit.

With this concept, the OFWs can group themselves together and apply for a group insurance policy. In the Philippines there are insurance companies which accept the concept of group insurance policy and insure a group of individuals with common benefits. If you cannot afford as OFW an individual insurance policy, try and get this group insurance with less premium yet with the same benefits if you were to pay for a single policy.

But why get another insurance policy? Is this not provided by the Overseas Worker Welfare Administration (OWWA)? What about Philippine Health Insurance Corporation (Philhealth)?
The Real Score about OWWA and… Philhealth

The Overseas Workers and Welfare Administration (OWWA) has never been an insurance company. It was a government agency formerly known as the Welfare and Training Fund for Overseas Workers created by law (presidential decree). Renamed as OWWA, it was expanded to provide for compulsory Medicare coverage which was later transferred to Philhealth, another agency created out of OWWA funds.

Originally envisioned by the government, OWWA imposes the US$25 contribution from the employer of every Filipino (the Overseas Filipino Worker or OFW) going out of the Philippines to work abroad. However, this amount has been shouldered by the OFWs because no foreign employer can be fooled to pay this mandatory fee to the Philippine government yearly or every contract renewal of the OFW.

The US$25 constitutes the fund which in the original omnibus policy shall be used exclusively for the benefit of the OFW. The fund has grown into hundreds of millions of pesos according to the latest claim by several NGOs notably Migrante International.
Sad to say, being a government agency, OWWA is subservient to the whims and caprices of the government bureaucracy. It is said that the OWWA fund can be diverted easily with mandate from the Office of the President as in the case of the creation of Philhealth.

One of the objectives of OWWA reads: To provide social and welfare services to OFWs, including insurance, social, work assistance, legal assistance, cultural services, and remittance services. Its quality policy says: OWWA measures its worth by total member-OFW satisfaction with timely interventions and quality standards set forth.

While insurance is one of OWWA's objectives, it has never been properly administered and the benefits have never been paid consistently by its management. There isn’t any OFW who can unconditionally claim being satisfied with the services provided by OWWA.

Let’s take the case of a very recent tragic incident.

Eugenia Baja’s death and much-delayed repatriation of remains were featured in the media and leading newspapers in June 2008. Reading this kind of news always breaks my heart -- not so much the sad story of the death of Baja but the delayed repatriation of her remains. Let's face it, death in whatever form – tragic or natural - is inevitable.
It is a pity the following should happen first before the remains of Baja could be transported back to the Philippines. As gathered from the news:

1. Lilibeth Baja-Garcia followed up the repatriation of her sister’s remains with the
Overseas Workers Welfare Association (OWWA) and the Department of Foreign Affairs
for three months to no avail.

2. When Garcia felt that her pleas were being ignored, she brought along representatives
from the 700 Club, a news talk show of the Christian Broadcasting Network.

3. ...because of the presence of media, OWWA officials immediately promised to give them
P20,000 ($450.349 at an exchange rate of $1=P44.41) for burial expenses, and a
P100,000 ($2,251.745) life insurance policy... The OWWA also gave them a direct contact
number to a certain Ed Lamparas who is working in the Philippine Embassy in Riyadh.

In her own words, Garcia summarized it: “Nag-iiba sila kapag may kasama kang media. Samantalang dati pinabalik-balik pa nila ako."

And do we have to add political color in the midst of grief?

4. …through the help of Migrante International, an organization of OFWs and their families,
Lilibeth Baja-Garcia was able to ask Senate President Manny Villar for assistance. Villar
gave money for the plane tickets of Garcia and two other relatives going to Bohol for
Baja’s wake. Congressman Edgar Chato of Bohol promised to shoulder the funeral
expenses for Baja.
5. Gladys Garcia from the legal department of Senate President Manny Villar was able to
negotiate with the NAIA administration to allow the relatives to fetch the casket.

What’s the real score?

We cannot change OWWA - how it is managed the way we would like it to be managed. It is not an insurance company that can invest the premiums collected in order to sustain claims when due. Because it is not an insurance company, OWWA cannot issue an insurance policy. Thus, the payment of benefits can be subjected to discretion by any OWWA personnel. This has been proven many times and only corrected (if ever) when exposed to media scrutiny.

With alternative insurance, OFWs will be assured of a well-managed, competitive premium payment, on one hand, and the insurance benefits consistently and uniformly applied to all members unlike with OWWA.

Worldwide Insurance

What is worldwide insurance? How is this made possible? How can the ordinary OFW be assured that his alternative insurance will have a worldwide coverage?

In every insurance contract, a premium is paid for by the insured to cover a certain risk which is assumed by the insurer. The premium, as we know of, is way below the assumed risk. The best example here is the OWWA contribution of US$25 (premium) with a return maximum claim (assumed risk) of Php100,000 in the event of death by the insured OFW.

In the case of OWWA, the individual contribution of US$25 is deposited in any accredited bank inside the Philippine territory and is expected to grow into millions what with contributions pouring in from millions of OFWs every year.

With this system, the funds remain inside the Philippine territory and the assumed risk is totally absorbed by OWWA itself. In the event of a catastrophe, this system will not be able to sustain a very large loss of the OFW population.

So how do you make the US$25 get a worldwide coverage?

If managed by a private insurance company, part of the US$25 would be paid as re-insurance premium to an insurance broker with worldwide acceptance among the leading re-insurers outside the Philippines. This is called re-insurance contract.

The concept of re-insurance is to spread the risk so that in the event of a claim, every member of the re-insurance contract will have to share the burden of claims payment. In a very competitive insurance market, we can expect any local insurance company to provide the best and most efficient management of claims applied for by the beneficiaries.

In the US, every citizen is encouraged to buy medical insurance coverage. Most often than not, hospitals do not accept payment in cash but prefer medical insurance to cover patient's hospital bills. Cash is accepted to pay for hospital service that is not covered by the medical insurance. For added premium, repatriation of remains is included in the coverage.

In Saudi Arabia, the government has made it compulsory for all employers to provide free medical health insurance coverage to all employees effective 2005. This compulsory medical insurance covers Saudis and Non-Saudis; thus, making this country the leader in terms of providing free medical insurance to its workforce in the Middle East. Lucky employees are provided an additional free life insurance coverage by large companies.

If such worldwide insurance coverage is possible in countries like Saudi Arabia, it is also possible to have this kind of insurance coverage in the Philippines.

What is Alternative Insurance with worldwide coverage?

An alternative insurance coverage is another insurance premium paid for by the OFW to secure insurance coverage both for himself/herself and family. The benefit is worldwide and covers OFW repatriation (dead or alive). It will include the medical health benefits of the family in the Philippines during the tenure of the OFW working overseas. After the long sojourn, the OFW may opt to continue the coverage while re-integrating himself/herself and may have the option to terminate the insurance coverage at any point in time.

Before working overseas, an OFW should buy this special kind of insurance so that in the event of death or when incapacitated, it is the insurance company that will work toward the fulfillment of the claim applied for by the OFW or the beneficiary.

In the Philippines, there is an actuarial study (feasibility study) being conducted by one of the biggest insurance companies providing this kind of alternative insurance cover for OFWs. The study is considering payment of affordable premium similar to the payment of US$25 while the benefits triple or quadruple the benefits you get from OWWA.

If this alternative insurance cover is realized, OWWA's term will have to end and instead a more responsive and competitive insurance scheme will take place. OFWs will embrace the alternative insurance. NGOs will request the government to discontinue the existence of OWWA.

With the alternative insurance, OFWs wherever they may be deployed, will have the comforting thought that come what may, during their tenure in their country of work, their loved ones left in the Philippines will be supported financially.

Unlike with Eugenia Baja's remains that had to wait for political and financial patronage in order to be repatriated, beneficiaries of a worldwide insurance coverage only need to submit the required documentation by the insurance company located in the Philippines and wait for the OFW’s remains to be delivered at the beneficiary's doorstep.

And unlike with OWWA, the beneficiaries need not beg. They need not wait for three months or more. They need not go to the Department of Foreign Affairs for assistance. They need not employ tactics like contacting media to get the attention of the government authorities.

Copyright © 2008 to Barangay OFW. All rights reserved.


Tony@NIPPON said...

Sir Freddie,
Before I left last year to work, I tried to secure insurance as well. I asked two big insurance company on which coverage is best suited for me, both ended giving me a choice of the much rewarding "Pension Plan with a Life and disability insurance" incorporated on the plan. So, I took the plan and paid the initial quarter plan. Up until the quarter had lapsed, I was not given their policy copy. Until they are asking my wife to pay the next quarter which I declined because of simple documentation issues they cannot settle. So, for a price of around 200USD on that quarter, all I got was a piece of sales invoice. Anyway, perhaps just to get me paying again, they sent me the policy at last. However, I lost confidence on the company. Up to now, I have no personal insurance. God forbid, if something happens to me here, I have nothing to pay for my medical. I brought this attention to my employer and is now studying my concern. How come my employer did not buy me an insurance? It was on my contract-as direct hired- to buy my own.

Anyway, I hope all of us OFW can be more crucial in looking into having a good and healthy lifestyle on our jobsites. Food intake, unhealthy lifestyle and other stress related issues can contribute to possible sickness. "Bawal Magkasakit" is indeed my mindset everyday i work.
But what about accident? Hmm.... This bothers me.

P.s. I can scan and email to you the original policy for your review Sir Freddie, if you want to.

P.s.2 - I came back last month to Philippines to get business visa, however, I was required to get another OEC even though I just got OEC last April08. That time, I paid also around 900+php for Philhealth, while my OWWA is still good after securing it in Singapore.

Freddie said...

Dear Sir Tony,

Thank you very much for this valuable comment.

Everything you said is true. I had myself insured and whilst I received copy of my policy unlike yours, I discontinued payment of premiums because I have to use the money in more pressing concerns. My case is more common I believe in most of us OFWs.

This time however, the actuarial we have requested should cover every concern be it operational or administrative because we are talking here millions of subscribers who will demand the best services any insurance company can offer. We are talking here of millions of profits in the insurance industry and this much money should drive the competition to deliver the best competitive services to OFWs availing the alternative insurance scheme.

Once realized and the govt follows, I am pretty sure you'll not be paying for 2 OECs in one year!

Cheers and good day. Freddie