Insurance for Filipinos is motioned as a liability rather than a source of funds when events in life go from bad to worse. However, this notion has progressively changed in the past years as better insurance coverage covering individual customers with specific needs and persons needing medical insurance given their condition was then introduced in the country. With that, it resulted in the increasing insurance penetration in the Philippines and a change in how consumers behave in buying insurance policies. This change has affected the overall consumption of premium insurances which is accounted for 1.4 of the country’s national income.
Based on Inquirer, for the past century, the insurance industry has been long-standing but surprisingly only 16% of the middle to upper-income Filipinos have insurance policies, as being deemed as a liability rather than a contingency plan. (Research from the Sun Life Financial Philippines Inc.) According to Mylene Lopa the chief marketing officer of SLFP, it stated in the SunLife Study of Lifestyles, Attitudes, and Relationships in late 2017, surveying 1,200 respondents showed 71% of the middle to upper class knew about insurance but inversely only 16 percent owned life insurance policies. The state of awareness goes up the higher one’s income segment and the lower the income awareness and utilizing insurance policies is dire. During the year 2018, almost 17% of the Filipino population lived below the national poverty line. Connected to this the number of insurances covered by insurance in any form whether by traditional products or the newer insurance models have been honed by this reality in the socio-economic status of the people. Going back to Sun Life’s research the question begs to instill why the insurance penetration is still low. Wherein 3 main reasons can be used to reason with this low penetration. One is that Filipinos have a traditional mindset. Secondly, Filipinos have a short-term time horizon, lastly insurance is still sadly deemed to be a liability rather than an expense or even an asset.
With the recession brought by the pandemic, insurance policies could be a way to alleviate the sudden pressures brought by unwanted problems like being sick and not knowing how to pay the bills. Life insurers state that there is a low penetration with the ongoing pandemic since the big problem is that not everyone who has been infected with Covid19 has insurance coverage. Sison explained that the Philippines remains an underpenetrated market when it comes to individual insurance. The latest Insurance Commission (IC) data showed insurance penetration the premium volume as a share of GDP is only at 12.69 percent as of September 2019. Sison also exclaimed that financial literacy should be taught to people to view insurance gain as a priority to make our countrymen less vulnerable to the unprecedented.
Though in light of the Covid-19 pandemic and the calamities in the country we should gear towards insurance coverage for all. Insurance now is a necessity more than ever, Filipinos like us should already see the risks involved with the lack of financial security with the cases of deaths in the country. The 2019 recent survey among insurance owners in the Philippines stated that 30% replied that life and hospitalization insurance were their most preferred insurance policies. Filipinos with pre-need insurance plans took life insurance plans amounting to almost one million in 2019. That hope that insurance gives of being free financially begs to question, Ikaw insured ka na ba?
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Written by: Leo Llanita
Layout and Design by: Dennis Amoroso
References:
Ben O. de Vera. (2020, May 25). COVID-19 claims show low insurance penetration in PH, say life insurers. INQUIRER.net. https://business.inquirer.net/298179/covid-19-claims-show-low-insurance-penetration-in-ph-say-life-insurers
Dumlao-Abadilla, D. (2018, 2). Insurance penetration in PH remains low. INQUIRER.net. https://business.inquirer.net/251823/insurance-penetration-ph-remains-low
Topic: Insurance industry in the Philippines. (2020, December 7). Statista. https://www.statista.com/topics/5581/insurance-industry-in-philippines/#dossierKeyfigures
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