Insurance penetration in the Philippines remains very low at 1.75%, according to Insurance Commissioner Reynaldo Regalado, although digitalization and financial literacy are expected to play key roles for its improvement.
In his keynote speech at the first Life Insurance Convention Philippines in Cebu City, Regalado said that while the financial results for the country’s insurance sector presented increased overall, insurance density and penetration remained low, with density standing at PHP872.56 (US$15.36).
However, in a report from the Manila Standard, he also remained optimistic on the roles that financial literacy programs and digitalization will play to encourage more citizens to be insured.
“I am optimistic that our efforts are bearing fruit, especially as total premiums collected by life insurance companies from their new business has increased to P15.47 billion, or by 18.16%, year-on-year,” Regalado said.
As part of its digitalization programs, the Insurance Commission introduced online submissions and approvals of new insurance products and is set to unveil regulatory guidelines on Islamic insurance later this year. Regalado added that financial literacy will be important, as a higher standard would mean that more Filipino families will be covered by insurance to guard against uncertainties in life.
“Financial inclusion is not only about increasing the percentage of the population who have access to financial products and services. It is more about reducing the demographic disparities between that portion of the population who are unable to participate in the formal financial sector and those who are unable,” he said.
Finally, Regalado also urged the industry to help in spreading financial literacy and awareness to increase financial inclusion in the county.
“May I thus call upon your organizations to continue supporting financial literacy programs that provide awareness of the benefits of financial products and services, particularly insurance policies that guard against risks that can result in financial ruin,” Regalado said.
Apart from the low insurance penetration rate, the Philippines is also experiencing a surge in reinsurance costs driven by increased risk exposures to natural calamities because of climate change, resulting in higher prices for nonlife products.
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