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Philippine insurance penetration rate and what needs to be done to improve it

By Michael F. Rellosa

The insurance penetration rate at about 2 percent of our GDP is arguably the lowest in the Asean region. This has long been known to the industry and some measures have been taken to try and improve this.

One of the prime reasons for the low rate is the affordability of Insurance products and the reality that insurance spending is low on the priority list of the populace, with the basics such as food, shelter, clothing, and education taking precedence over insurance. The second main reason is that few people realize the importance and utility of insurance as a risk management tool and as something to rely on after an unfortunate or catastrophic incident has occurred. On top of this, few people also know of the many general or non-life insurance products that they can choose from to answer their specific or particular needs. Finally, there may be a mismatch between the products available vis-à-vis the emerging risks that Filipinos now face.

PIRA as the industry association has on its own and in collaboration with multilateral organizations such as the World Bank, the Asian Development Bank and the German Agency for International Cooperation (GIZ); United Nations related groups such as the United Nations Environment Program Finance Initiative (UNEPFI), and the United Nations Office for Disaster Risk Reduction (UNDRR); NGOs such as Earth Security, Arise Philippines; the academe (UP, Ateneo, PUP, La Salle, New Era, Asia Pacific College; local and international media organizations, and international specialist associations such as the International Union of Marine Insurance (IUMI), the International Machinery Insurers' Association (IMIA), Digital Pilipinas, Asean Insurance Council (AIC); government agencies such as the Insurance Commission (IC), the Banko Sentral (BSP), Bureau of Treasury (BoTr) The legislature's upper and lower houses, Department of Agriculture (DA), The Land Bank, the Department of Environment and Natural Resources (DENR), have launched initiatives addressing the different facets of the problems stated above.

To give a bird's eye view of the ongoing projects, allow us to mention a few:

  • PIRA/IIAP/GIZ – working on strengthening disaster resilience and risk mitigation through ecosystem-based planning and adaptation in the Philippines.

  • World Bank/The IC/DoF/PIRA – working on the increase in the facility for disaster risk finance for both the traditional market and the lesser-served segment of the populace through its Philippine Catastrophe Insurance Facilities 1 and 2.

  • World Bank/ADB/DA/and other related government agencies — working on possible ways for the private sector to be able to lend its capacity, and facilities to the Agri-insurance sphere.

  • Earth Security/PIRA – collaborated on a landmark study on the protective value of coastal ecosystems such as mangroves, seagrass meadows, and coral reefs.

  • PIRA/AIC – collaborating on strengthening insurers' capability of responding to the insuring public's needs via several interrelated projects, primary of which is the creation of new products, capacity-building and financial/insurance education throughout the Asean.

  • PIRA/Digital Pilipinas – collaborating on projects that while facilitating the teching up of the insurance industry, also create new insurance products, modes of distribution and policy administration that redounds to the benefit of the insuring public.

  • BSP/PIRA and the IIAP – continue to increase their capacity-building activities through conferences, exhibits, summits, seminars, webinars and roundtable discussions.

These are just a few ongoing examples or initiatives that PIRA is working on with others who share the same objectives, primary of which is to create a sustainable industry while addressing the most pressing needs of the insuring public via new or improved products, mode of distribution and administration, affordability, risk-appropriate coverages and financial/insurance education. We recognize the fact that an all-of-society and multi-pronged approach is required urgently, if the country is to adequately lift the penetration rate to a level that would allow us a modicum of resiliency.


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