Nonlife insurers want lower microinsurance taxes
A group of nonlife insurers is pushing for lower taxes on premiums as a way to encourage industry players to go into microinsurance, which the government is actively promoting.
Michael F. Rellosa, a trustee of the Philippine Insurers and Reinsurers Association (Pira), said in an interview that 25 percent of the premium on property insurance goes to taxes, pushing up the price of such products.
“Perhaps the government can review this, as it is the poorer sector of society that would be buying [microinsurance policies] and are the ones taxed,” he said.
The high tax component of premiums, which means high prices that push down demand, is one reason why “much needs to be done to be able to entice commercial nonlife insurers” to go into microinsurance, he added.
Further, Rellosa said that microinsurance—being by nature a low-premium, high-volume kind of business—makes it less attractive for commercial firms.
“Additionally, it is expected to have a higher-than-average loss ratio,” he said. “Companies who do go into this will have to review their models and have a system that can handle such types of businesses.”
Rellosa said there should be a continued dialogue between Pira and the Insurance Commission on this matter, so that the best solutions can jointly be forged.
The Department of Finance has called on nonlife insurance firms to participate more actively in the promotion of microinsurance as they lag behind efforts by life insurers.
Finance Undersecretary Gil S. Beltran earlier said that out of 80 microinsurance products that the Insurance Commission has approved, only 26 or less than a third are nonlife policies.
Also, out of the 78 licensed nonlife insurers, only 15 or a fifth offer microinsurance products.
“The nonlife [industry segment] is lagging behind,” he said. “We need to do more.”
