The Philippines is facing a $528 billion risk-protection gap by 2020 if families remain underinsured, estimates by regional insurance giant AIA show.
The shortfall underscores the need for greater insurance planning, American banking giant Citigroup said in a press statement.
Protection gap is measured as the difference between the resources needed and the resources already available for dependents to maintain their living standards in the unfortunate event that a working family member is no longer able to provide.
A report from Zurich-based global reinsurer Swiss Re estimated the mortality protection gap for the region widened further for the 13 Asia Pacific markets covered by the report. The gap was estimated at $58 trillion as of end-2014.
“In many markets, the growth of life insurance coverage has lagged behind economic growth, increasing income and the cost of living. The current gap equals about 6.6 times the current amount of life insured in the markets in the report,” Citigroup said.
Citi teamed up with AIA at the end of 2013 to form Asia’s largest bancassurance agreement.
Based on current trends, AIA estimated the gap in the Asia-Pacific region would continue to grow and increase to a total of $82 trillion by 2020.
For specific markets, AIA estimated that the gap would grow to $763 billion in Hong Kong, $570 billion in Singapore, $46 trillion in China, $12 trillion in India, $11 billion in Indonesia, and $10 billion in Thailand.
For the Philippines, the prospective shortfall was at $528 billion.
“The widening protection gap underlines the growing need for innovative, compelling and meaningful savings and protection offerings by consumers in markets all around the region,” Citi said.
In line with this, Citi will roll out a new educational campaign in six markets initially—Hong Kong, Singapore, China, Indonesia, India and the Philippines. The bank said the campaign, “Have You Done Enough?”, sought to simplify and explain the risk of underinsurance and at the same time encourage clients to assess their insurance needs.
The campaign will be introduced in Citi’s over 500 branches in the region and throughout the bank’s digital banking network in Asia.
“Taking insurance to protect future earnings and lifestyle should be a higher priority for consumers in the region. More needs to be done to further increase the awareness of the benefits of insurance protection to the general public. This is a priority for Citi in Asia, and in partnership with AIA, we are confident that we can offer our clients the solutions they increasingly need to protect themselves for the future,” said Anand Selvakesari, Citi’s head of consumer banking in the Asia Pacific.
Bea Tan, Citi’s consumer banking head in the Philippines, added: “Our clients are beginning to understand the importance of having protection products in their portfolio. The challenge here is not just having protection, but the right amount of protection to ensure a secure financial future. We will continue to leverage on our long relationships with our clients so they can close the protection gap in their financial planning.”
“Asia is increasingly underinsured with a widening protection gap. As the leading life insurance group in the region, AIA is committed to and focused on helping our customers meet their protection needs. We are dedicated to address this by investing more in consumer education and provide protections that best suit people’s evolving needs, including through our partnership with Citi,” said Gordon Watson, regional chief executive of AIA Group.
AIA Group claims to be the market leader in the Asia-Pacific region, excluding Japan, based on life insurance premiums. It has total assets of $172 billion as of end-May 2015.
AIA has presence in 18 markets in the Asia-Pacific, including wholly-owned branches and subsidiaries in Hong Kong, Thailand, Singapore, Malaysia, China, Korea, the Philippines, Australia, Indonesia, Taiwan, Vietnam, New Zealand, Macau, and Brunei.