State-run Social Security System (SSS) is looking at tapping private firms to insure its 35 million members after a similar proposal was rejected by the Government Service Insurance System (GSIS).
SSS president and chief executive Emmanuel F. Dooc told reporters that the GSIS had formally declined to provide insurance coverage to SSS members, saying that the GSIS was not mandated to cover private assets and nongovernment workers.
Also, the GSIS had expressed concern why “a social security entity would take on the risk of another social security,” Dooc added.
As such, the SSS would turn to its “plan B” which is to tap private insurance companies, Dooc said.
Dooc, however, acknowledged that private insurers might be deterred by the SSS’s large payouts. For instance, its yearly pension payout reaches P100 billion, whereas the biggest insurance firm last year grossed only P32 billion, he said.
“Who among our domestic players can absorb that risk? They may be unable to do so. But if they can price it properly, it will be a big boost to the local insurance industry,” Dooc said.
“The risk is very substantial, so they may be concerned if it would be a viable business proposition,” he added.
Dooc said the SSS had been in talks with the Actuarial Society of the Philippines as the pension fund was looking for an insurance provider that could come up with a special product that would meet the SSS members’ current benefit cover.
The SSS was looking for an insurance provider to reduce expenditures arising mainly from higher pension payments.
As the SSS grants insurable benefits such as death, burial, sickness and disability to its members, it can bring down expenses by transferring the risks, Dooc explained earlier.
“The insurance may also address coverage gaps which impair the death or pension benefits when a member dies or retires with an outstanding loan. We can adopt or design products to expand coverage like unemployment benefits and annuities,” according to Dooc. —BEN O. DE VERA