Microinsurance can hike insured in PHL

Microinsurance can hike insured in PHL

WEDNESDAY, 27 JULY 2011 18:45     VG CABUAG / REPORTER  


MICROINSURANCE products may increase the number of insured individuals in the country but the government should help the insurance industry offer it to as many people as possible, a life insurance group said.

The Philippine Life Insurers Association (PLIA) said that since microinsurance was placed at the Aquino administration’s medium-term development plan as a means for poverty alleviation, the government should help the industry by waiving some of the taxes imposed on the product.

Eulogio Mendoza, one of PLIA’s officers and also a chief executive of the Asian Life and General Assurance Corp., told reporters that it would be a big help to the industry if the government could waive the 2-percent premium tax on microinsurance products and also the documentary stamp tax (DST).

“We are pushing for the removal of the premium tax for microinsurance,” Mendoza said.

The DST imposed is graduated to a maximum of P100 for policies with face values of P1 million, and as such it will translate to an insignificant amount for microinsurance products.

According to Insular Life’s president and chief operating officer Mayo Jose Ongsingco, the rule of thumb in offering a microinsurance product is that the price or maximum premium for each should not exceed 5 percent of the daily income of a worker.

“If the daily wage of the worker is P400 per day, your premium should not exceed P20 a day or P600 per month for microinsurance,” Ongsingco, who is also PLIA’s president, said.

Ongsingco said that since a company’s margins on selling the product to the public is very small, microinsurance cannot be sold by its regular agents.

“We were telling our members that when you roll out microinsurance, it could be a part of the company’s CSR [corporate social responsibility] since the margins are small,” he said.

Citing figures from the Department of Finance, Ongsingco said that insurance penetration in the country is only at 13 percent of the insurables or those people who can be insured. Of the said figure, only 3 percent were from individuals and the rest were from the group insurance such as companies providing it as a benefit to their employees.

“We need to work on increasing the penetration rate on individuals since there would always be demand for group insurance from the corporate sector.  Microinsurance will help us push the individual penetration rate,” Ongsingco said.

The group is confident that microinsurance could help lift the number of insured individuals in the country as the terms for the said product is simple compared with the traditional products.

Ongsingco estimated that 60 percent of the insurable population can afford to buy a microinsurance product in the country, which includes laborers, vendors and public utility drivers. The 20 percent of the said insurable population are too rich that they do not need insurance, while the other 20 percent are so poor that they cannot afford it.

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