COVID-19 claims show low insurance penetration in PH, say life insurers
The “small” number of COVID-19 claims to date reflected low insurance penetration in the country, according to life insurers.
At an online press briefing last week, AIA Philam Life chief marketing officer, Leonardo Tan Jr. said the company paid out 10 claims related to COVID-19 so far, with these policyholders belonging either to those with high net-worth or the middle class, and mostly senior citizens.
“Majority of the claims were for death benefits. Technically, this is not a true representation of the real scenario as we have received only a handful of claims and our portfolio of medical products is quite new,” Tan explained.
Across life insurers, “there has been no spike in claims” even amid the COVID-19 pandemic, Philippine Life Insurance Association (PLIA) president Benedict C. Sison told the Inquirer last week.
This was despite many life insurance companies covering death due to COVID-19 as well as product offerings providing hospital income benefit when clients are afflicted with the disease, said Sison, who’s also Sun Life Philippines chief executive and country head.
“We have processed and settled a number of claims, but I would not say there has been a spike or surge,” Sison said.
“They are within the usual range of claims we get pre-COVID-19. Given the current trend of COVID-19 infections and the current mortality rate, and the capitalization of the life insurance industry, we remain confident that we will be able to service claims arising from this pandemic,” Sison said.
“Perhaps one reason why there hasn’t been a bigger number in terms of COVID-19-related claims could be because not everyone who has been infected with COVID-19 has insurance coverage,” Sison said.
“As you may know, the Philippines remains to be an underpenetrated market when it comes to individual insurance,” Sison explained.
The latest Insurance Commission (IC) data showed insurance penetration—defined by the regulator as “premium volume as a share of gross domestic product (GDP)” or contribution of the insurance sector to the national economy—in the Philippines stood at only 1.69 percent as of September last year.
“Insurance penetration rate in the country is relatively low because financial literacy is still evolving,” Sison said.
“A lot of Filipinos are either not aware of the benefits of being insured and being invested or have not considered to be a priority,” he said.
“That’s why we continue to help raise financial literacy through various means, especially now because this pandemic has not only put our health at risk but also our financial security,” Sison added.
“And sadly the low penetration of insurance and lack of emergency funding sources make some of our fellow Filipinos more vulnerable to this crisis,” Sison said.
“Fortunately, regulations are evolving and have been responsive to the demands of this crisis,” he said.
“We also see more and more Filipinos now becoming more aware of the benefits of having insurance. So we continue to reach out to them and offer our services in order to secure them and their loved ones, financially at this critical time,” Sison added.
Last month, the IC surveyed insurers on their COVID-19 claims, but officials did not respond to the Inquirer’s request for comment nor survey findings.
Edited by TSB
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