In a bid to boost overall coverage in a country known to have a very low level of insurance penetration, AIA Philippines chief executive officer Kelvin Ang suggested tax relief on insurance premiums, a model similar to what Malaysia is currently implementing, wherein a rebate is provided to yearly premiums.
During the launch of AIA Investment Management and Trust Corp. Philippines, Ang noted that there has been an increase in demand for insurance in the country over the past five years, compounded by the global pandemic that affected its economy in 2020. A rise of 60% has been recorded in terms of the numbers insured in the country, a figure that could still rise given added awareness.
“I believe that insurance protection, healthcare or long-term care will continue to outrun the GDP (gross domestic product),” Ang said in a statement. “Also the demographic dividend, we have more young people. The macro structure of the country will support the growth.”
Despite noting an overall improvement in terms of insurance coverage within the country, this number still remains relatively low compared to its neighbours in Asia. Ang said that it would take a lot of work to increase the penetration, with financial literacy an important factor in order for the rate to eventually grow.
Insurance penetration in the Philippines is at around 2% of the GDP. To tackle this figure, Ang said that the government should consider tax relief on insurance premiums, but it has encountered setbacks.
“We have suggested it already, we continue to lobby for this, but with the BIR (Bureau of Internal Revenue), it takes time,” Ang said. “It has not moved, it’s a big country and there are many priorities. And insurance doesn’t normally get the high priority.”
If it ever gets seriously considered, such tax relief will need legislation to be executed by the BIR.
January saw the appointment of a new BPI AIA CEO in the Philippines as Karen Custodia officially took the post. BPI AIA is a bancassurance joint venture between the Bank of the Philippine Islands (BPI) and pan-Asian insurer AIA.
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