Credible insurance industry to boost financial protection
Ensuring a credible insurance industry is seen as translating to better financial protection among Filipinos amid the need to broaden coverage as vulnerabilities and risks increase over time. While the government has transformed the insurance sector into a robust and dependable one, Finance Secretary Ralph Recto believes that more needs to be done in order to widen the scope and awareness of the public.
“A credible insurance industry encourages more people to avail themselves of financial protection,” Recto said.
“That is important to strengthening our people’s financial resilience in the face of so many uncertainties,” he said.
Insurance is one way of managing one’s risk through protection against unexpected losses. It also targets to cut down on financial uncertainties.
Unfortunately, while it has improved, insurance penetration in the Philippines remains small, accounting for less than two percent of the economy.
Recto emphasized that the country’s vulnerability to disasters and climate change calls for the development of new products, implementation of innovative solutions, and utilization of new technologies.
The finance chief urged the Insurance Commission (IC) to pioneer creative, out-of-the-box solutions to tackle such emerging issues.
“We must continuously institute regulatory measures and enforcement mechanisms to ensure the financial stability of our regulated entities and protect the insuring public,” Recto said.
“By effectively fulfilling its role as a regulator, the Commission ensures consumer protection and the reliability of insurance coverage,” he said.
SUSTAINABLE GROWTH
Nonetheless, the industry has been recording sustained growth in assets, earned premiums, and investments.
As of the third quarter of 2023, total premiums collected by the sector was at P289.6 billion, up nearly three percent, while assets improved 10 percent to reach a record P2.23 trillion.
Similarly, aggregate investments rose 15 percent to P1.98 trillion.
Recto said the government must strengthen the implementation of the Financial Products and Services Consumer Protection Act.
This will empower consumers by providing them with confidence in accessing financial products and services within a secure environment that prioritizes their rights and interests.
The finance chief also urged the IC to collaborate with schools and universities in fostering financial education among students to cultivate a generation of financially literate individuals capable of making prudent financial choices.
“A financially literate population is crucial for the development of a robust capital market and a globally competitive Philippine economy,” Recto said.
INSURANCE FOR OFWs
The availability of insurance products should also extend to overseas Filipino workers (OFWs), a likely signal on the possible lifting of restrictions in the current framework.
While Recto has yet to go into specifics, he could be signaling a possible review of existing regulations on selling insurance policies to OFWs while they are working abroad.
Such is already being done by the IC and is supported by various insurance companies.
It should be noted that current regulations require OFWs to be in the country physically to complete a purchase of life protection products from local-based companies.
There are close to two million OFWs abroad contributing $135 billion in remittances or roughly 10 percent of the overall economy. However, a huge chunk of OFWs do not have social protection, a fact that was only highlighted by the pandemic.
Insurance firms earlier said tapping OFWs would also improve overall insurance penetration in the country.