GRAPHIC: Insurance premiums: http://link.reuters.com/cyq35w
By Neil Jerome Morales
MANILA, Aug 3 (Reuters) - The Philippine life insurance sector
is predicting a record year for premiums, but poor financial
literacy and the relatively high cost of insurance plans mean it
would be a while before penetration rates catch up with the rest
of the region.
The improving Philippine economy, one of the fastest in
Southeast Asia, is giving ordinary Filipinos stronger incentive
to save. Filipinos, particularly those working in business
process outsourcing firms and families of overseas workers, are
increasingly buying insurance policies thanks to more disposable
income. The local insurance industry expects premiums to rise by
more than a quarter to a record 200 billion pesos ($4.39
billion) this year from 2014, nearly triple the total five years
ago. But that's coming from a very low base, and some long-term
hurdles remain.
"For some, they don't have the means and some don't know how
(to prepare financially)," Rizalina Mantaring, president of the
Philippine unit of Sun Life Financial Inc SLF.TO , told
Reuters. Formal financial institutions and insurance agents, two
important intermediaries in an insurance sector, are also absent
in many parts of the Philippines, she said. One-third of the
country's 1,630 cities and municipalities remain uncovered by
banks, central bank data shows.
Also, the cost of insurance is still beyond the reach of
many Filipinos, prompting the industry to offer coverage for as
low as 500 pesos a month, a shade above the 481 pesos minimum
daily wage in the capital, Insurance Commissioner Emmanuel Dooc
told Reuters.
Life insurance penetration, measured in premiums-to-gross
domestic product, is around 1.5 percent, below the benchmark 3
percent in Southeast Asia. That means the local units of Sun
Life, AXA SA AXAF.PA , AIA Group Ltd's 1299.HK Philam Life
and Prudential Plc PRU.L have room for growth. "We are aiming
to at least achieve the penetration rate of Southeast Asia
within the next three to four years," Dooc said.
(Editing by Ryan Woo)