PH insurance penetration and what needs to be done to improve it


Insurance penetration is arguably the lowest in the ASEAN region, at around 2 percent of our GDP. The industry has long been aware of this and some measures have been taken to improve it.

One of the main reasons for the low rates is the affordability of insurance products and the fact that insurance spending is not high on the priority list of the population as basic needs such as food, shelter, clothing and education take precedence over insurance. The second main reason is that few people realize the importance and benefits of insurance as a risk management tool and something to rely on after an unfortunate or catastrophic event. In addition, few people know about the many general or property insurance products they can choose from to meet their specific or special needs. Finally, there may be a mismatch between the products available in terms of the new risks facing Filipinos today.

PIRA as an industry association has launched initiatives on its own and in collaboration with multilateral organizations such as the World Bank, Asian Development Bank and the German Society for International Cooperation (GIZ); UN-affiliated groups such as the United Nations Environment Programme Finance Initiative (UNEPFI) and the United Nations Office for Disaster Risk Reduction (UNDRR); NGOs such as Earth Security, Arise Philippines; academia (UP, Ateneo, PUP, La Salle, New Era, Asia Pacific College); local and international media organizations and international professional associations such as the International Union of Marine Insurance (IUMI), International Machinery Insurers' Association (IMIA), Digital Pilipinas, ASEAN Insurance Council (AIC); government agencies such as the Insurance Commission (IC), Banko Sentral (BSP) and the Department of Finance (BoTr); the Upper and Lower Houses of the Legislature, the Department of Agriculture (DA), the Land Bank and the Department of Environment and Natural Resources (DENR) to address the various facets of the above issues.

To give you an overview of the ongoing projects, we would like to mention some of them:

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

– World Bank/IC/DoF/PIRA – are working to expand disaster risk financing options for both the traditional market and the underserved segment of the population through their Philippine Catastrophe Insurance Facilities 1 and 2.

– World Bank/ADB/DA and other relevant government agencies are working on ways for the private sector to contribute its capacities and facilities to the agricultural insurance sector.

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

– PIRA/AIC – Collaborating to strengthen insurers’ capacity to respond to policyholders’ needs through a number of interlinked projects, primarily new product development, capacity building and financial and insurance education across ASEAN.

– PIRA/Digital Pilipinas – Collaborating on projects that promote the mechanization of the insurance industry and create new insurance products, distribution channels and policy administration that benefit the insured.

– BSP/PIRA and IIAP – continue to strengthen their capacity building activities through conferences, exhibitions, summits, seminars, webinars and round tables.

These are just a few ongoing examples or initiatives that PIRA is working on with others who share the same goals. The most important of these is to create a sustainable industry that simultaneously meets the most pressing needs of policyholders through new or improved products, distribution and administration methods, affordability, risk-adjusted coverages and financial/insurance education. We recognize that a whole-of-society and multi-faceted approach is urgently needed if the country is to raise the penetration rate to a level that allows us to have a minimum level of resilience.