Philam Life eyes microinsurance

Life insurer Philippine American Life and General Insurance Co. (Philam Life) plans to venture into microinsurance to help close the protection gap in the Philippines.

In an interview, Philam Life chief executive officer Kelvin Ang said the company wants to go back into microinsurance as part of its efforts to focus on Filipinos outside the A and B class, which make up majority of the population.

“We are looking at some time next year,” Ang said when asked when its microinsurance products would be launched.

For its microinsurance business, Ang said Philam Life is exploring partnerships with BanKo, the microfinance arm of its bancassurance partner, Bank of the Philippine Islands (BPI) and Palawan Express.

“We are working with them and we are now looking for the platform because we need to make sure we have the platform to distribute this at low cost,” he said.

According to Ang, this would not be the first time that Philam Life would enter the microinsurance business. However, he said the company’s first venture into this sector before went unsuccessful as the insurer had problems servicing its clients.

“But today is very different because it’s digital. With digital, we can do a lot more at low cost,” he said.

Ang said Philam’s pivot into the microinsurance business is part of the company’s efforts to address the protection gap in the Philippines, which is currently at P1.5 trillion. He said insurance penetration in the country also continues to be below two percent.

The Philam Life chief also noted that the local insurance market has become predominantly focused on investmentlinked insurance products at 75 percent, with the protection function of life insurance policies “taking a backseat.”

For this reason, he said Philam Life will start to focus again on selling traditional life insurance products.

“The industry is 75 percent (variable linked products) and we are about the same. But we are starting to dilute to shift to protection,” Ang said.

He said the company is targeting a 50-50 mix between investment linked products and traditional life insurance policies.

“But I don’t discount the fact that we’d probably go even more as we do some of these microinsurance,” he said.