Insurance penetration in PH remains low

The Philippine insurance industry has been around for over a century but only 16 percent of middle- to upper-income Filipinos have insurance products, which are still deemed as a liability than a source of fund for contingencies, a research from Sun Life Financial Philippines Inc. (SLFP) showed.

Mylene Lopa, chief marketing officer of SLFP, yesterday  presented the results of the latest Sun Life Study of Lifestyles, Attitudes and Relationships (Solar) which surveyed 1,200 respondents from the A,B and C income segments in late 2017.

The survey showed that about 71 percent of these middle- to upper-class Filipinos knew about insurance but only 16 percent actually owned life insurance products.

The level of awareness goes up the higher one’s income segment is. In the lower-middle class or C2 segment, lack of awareness was at about 85 percent while only 8 percent of the upper-middle class (C1) and 7 percent of the upper class (AB) lacked awareness of insurance products.

When it comes to investments, Lopa said the research showed that only 43 percent of Filipinos from the ABC segments were aware of mutual funds. She said this was understandable given that mutual funds were newer financial products compared to insurance.

Mutual funds, created by financial wizards for those who have no time or expertise to manage their own funds, pool investments for diversification and professional management.

“In that research, we tried to probe why that’s the case: why is the penetration still low? It boils down to three main reasons: Filipinos still have the traditional mindset; Filipinos have short-term time horizon and insurance is still viewed as a liability, an expense—not really as an asset,” Lopa said.

On the “traditional” mindset, Lopa said bank account was still the prominent financial tool for most people. About 16 percent of respondents have payroll bank accounts while 35 percent have nonpayroll-related bank accounts.