‘(T)he more people who join the industry, the better for the country. What we do serves the purpose of nation building. (According to one study) the more financially literate the people are, the more likely that the country will progress’
Despite the significant number of companies offering insurance in the country as well as the ease of access to insurance products brought by digitalization, the Philippines’ insurance penetration has barely moved in the past years and has even slightly declined as of end-September 2023 versus the previous year’s level.
According to data released by the Insurance Commission last December, the country’s insurance penetration eased to 1.68 percent from the year ago level of 1.81 percent.
Insurance penetration refers to the contribution of the insurance sector to the gross domestic product.
Sun Life of Canada Philippines, one of the top insurers in the country, has been actively pushing for the betterment of the country’s insurance penetration, through its financial literacy initiatives.
However, the company also recognizes there are a lot of factors as to why it remains low despite significant efforts to further improve the figure.
“The biggest concern about selling an insurance policy is really not the market, it’s financial literacy, financial education. Our insurance penetration rate is so low. (Potential clients) won’t just wake up in the morning and realize, `I need to buy an insurance policy.’ They have to be financially literate to appreciate that,” said Benedict Sison, chief executive officer and country head of Sun Life Philippines.
Sison, however, admitted financial literacy does not happen overnight.
“Just because I taught you once, it does not mean you will buy insurance. After I taught you once, you need to have the appetite to learn more,” Sison said.
“You need advisors to help (potential clients)…that’s the way to convince them. In fact, we’re so under-penetrated a lot of people here we know need insurance; but they’re just not financially aware they need it. You need to nudge them,” he added.
Sison said the low income of some potential clients is one of the constraints to improving the insurance penetration rate, as well as the still limited number of insurers and financial advisors in the country.
“We have less than 500,000 financial advisors servicing 115 million Filipinos. So the more people who join the industry, the better for the country. What we do serves the purpose of nation building. I read a study where it says that the more financially literate the people are, the more likely that the country will progress. So that’s what we should aim for,” Sison said.
Sison added the improvement in the insurance penetration will have to be an industry objective.
“Sun Life only owns 22 percent of the market. So we’re one-fifth of the market… one player doing it would not be sufficient. But for me, the fact that we have one player trying to grow is good enough. (The problem is), not only are we increasing the number of clients but even the population (is increasing). We should grow faster than the population to make that happen,” Sison said.
