INSURANCE penetration in the Philippines remains low due to lack of financial literacy and awareness, according to Sun Life of Canada (Philippines), Inc.
“There’s a lot of financial literacy that we still need to work on,” Sun Life Philippines Chief Distribution Officer Al D. Quitangon said in an interview on Wednesday. “We need to continue to educate more Filipinos on the importance of financial security.”
Sun Life wants more Filipinos to understand how insurance benefits them especially with the Philippines’ young demographics, he added.
The Philippines’ insurance penetration stood at 1.68% — the ratio of premiums to gross domestic product — at the end of the third quarter, according to data from the Insurance Commission (IC).
“When it catches you by surprise, we don’t want more Filipinos to experience that financial drought or financial dilemma when unexpected events in their life happen,” Mr. Quitangon said.
He said awareness is still key for Filipinos to appreciate insurance more. “The younger generation really would like to have a purposeful and balanced life. They want to work; they want to enjoy life at the same time.”
“It’s taking out the fear. To take out the fear is simply education and awareness. If you’re more aware, then you get less scared,” he added.
Filipino adults who had insurance fell to 17% in 2021 from 23% in 2019, according to the Bangko Sentral ng Pilipinas’ (BSP) financial inclusion survey.
Only 2% of Filipinos correctly answered all six basic financial literacy questions, while 69% correctly answered half of the questions.
Literacy efforts should focus on the youth because they account for the majority of the working population, Mr. Quitangon said.
“Insurance must be communicated to the youth, so they have appreciation and understanding,” he said. “If we’re able to relate and communicate well what we do or what our services and products can do, then we can improve literacy.”
A bill seeking to include financial literacy in the senior high school curriculum is pending at a House of Representatives committee. Under the measure, personal finance management, budgeting, saving, investing, credit and debit, insurance and taxes will be taught in schools.
As of end-September, the insurance sector’s overall net income grew by 9.4% to P38.28 billion, data from the IC showed.
The premium income of life insurance companies rose by 13.9% to P229.89 billion, while its net income was up by 10.3% to P28.79 billion.
The nonlife insurance sector’s total net premiums rose by 15.6% to P48.21 billion, while net income increased by 15% to P5.48 billion.
Also on Wednesday, the Government Service Insurance System said gross premiums written for its nonlife insurance business rose to a record P9.3 billion last year.
This was a 44% increase from 2022, the state-run pension fund said in a statement. Its net worth stood at P50.15 billion, making it the biggest nonlife insurer in the country, it added.
It said more government agencies were insuring their properties with GSIS. “In the face of more frequent natural disasters, securing insurance coverage becomes crucial in safeguarding assets and mitigating budgetary strains during calamities,” GSIS President and General Manager Jose Arnulfo A. Veloso said in the statement.
GSIS said it had intensified online and face-to-face insurance marketing caravans last year, while conducting training and capacity-building workshops for agency property officers from various agencies. — Luisa Maria Jacinta C. Jocson and Aaron Michael C. Sy