THE Philippines’ anticipated transition to upper-middle income country (UMIC) status could help increase the country’s low insurance penetration rate as more Filipinos may be able to afford insurance products.
Finance Secretary Ralph Recto told reporters at the sidelines of the Philippine Life Insurance Association’s anniversary celebration in Makati the country’s low savings rate contributed to the Philippines’ current insurance penetration.
Penetration for life insurance alone remains relatively low at 1.2 percent in 2023, compared to the global average of 2.9 percent and 2.2 percent in emerging Asia.
“If we had a higher savings rate, if we had higher income, then more people will be buying insurance,” Recto said.
Recto called on the life insurance industry to take advantage of the Philippines’ vibrant labor market, growing middle class, its demographic sweet spot and its projected ascent to becoming a UMIC in 2025 as well as the world’s 13th largest market in 2030.
“Next year, if not the end of the year, we could hit (upper) middle-income country status. As that increases, as our incomes increase, there would be more penetration of insurance products. As income level increases, more people will be interested, will be able to afford to buy insurance products,” Recto said.
The finance chief said that a significant increase in the insurance penetration will likewise be dependent on the insurance players.
“That’s up to the industry also. They have to be innovative. We are a sachet economy… use technology. That will help,” Recto said.
“This is both a challenge and an opportunity–a call to action for the industry to step up efforts in ensuring that every Filipino, especially those in low-income brackets, is protected and shielded from falling below the poverty line,” the finance chief added in his key note speech.
In 2023, the life insurance industry provided coverage equivalent to about 84 million lives, a 16 percent increase from the pre-pandemic figure of 72 million.
Of this number, 44 million lives were covered by micro-insurance products.
Meanwhile, the average amount Filipinos invest in life insurance has risen to P2,745.7 in 2023 from P2,182.8 pre-pandemic.
Meanwhile, insurance commissioner Reynaldo Regalado in the same event expressed optimism on the initial figures for the insurance industry in the first semester.
“Generally, we’re optimistic on the uptake of insurance by our country. Actually, that seems to be the projection of others, even for the next five to six years,” he added.
