Banner year for insurance industry seen in 2010

Published by rudy Date posted on October 4, 2010

IF their tax payments last year mean anything, the insurance industry may sustain its upward trek and post another banner year this year in terms of tax payments on insurance premium.

Insurers paid slightly more than P2 billion of insurance premium tax last year, which was 10.5 percent higher than premium tax paid totaling only P1.81 billion.

This was based on optimism by members of the umbrella group Philippine Life Insurers Association (PLIA).

Manulife president and chief executive officer Indren Naidoo, for instance, previously reported premium sales growth over six months this year that is 88 percent higher than the same period last year.

Most Philippine-based insurers anticipate premium sale growth of 10 percent to 15 percent this year, however.

That potentially means premium tax of up to P2.3 billion this year that will approximate premium tax collected in 2005, when this totaled P2.45 billion.

Acting Insurance Commission chief Vida Chiong acknowledged the very low insurance penetration rate of only 14 percent for the Philippines, which fares very poorly with those in the region and with such economic powerhouses as Japan or Singapore, where the penetration rate is more than 100 percent.

Penetration rates this high mean every man, woman or child in Japan or Singapore has one or more insurance policies in his/her favor, which contrasts sharply with the penetration rate in the Philippines, where only an estimated one in eight Filipinos has purchased a risk protection of some kind.

From insurance premium tax of P2.456 billion in 2005, this fell sharply the following year to only P1.685 billion, or a 31.4-percent plunge.

This bounced back the following year, when premium tax grew by 8.9 percent to P1.83 billion, but promptly contracted by 0.6 percent in 2008, when this totaled only P1.819 billion.

There is a sense of optimism among tax-policy planners that premium tax collection should rise significantly again, owing, in part, to the reduction of the premium tax to only 2 percent starting in January from 5 percent previously.

A joint public-private initiative offering micro-insurance policies to a greater number of Filipinos this year should also help lift not just the insurance premium tax collection but the country’s insurance-penetration rate down the line as well, deputy executive director Joselito Almario of the National Credit Council said. –Jun Vallecera, Businessmirror

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