Life insurance companies in the Philippines have a lot more to do if they want to narrow the gap between what it has been insuring and what is insurable, according to the Philippine Life Insurance Association (PLIA).
In a briefing held Tuesday, Renato Vergel de Dios, PLIA director and chief executive officer (CEO) and president of BDO Life Assurance Co., noted that the protection gap in the Philippines amounts to P1.17 million per household, with the industry covering just “a small percentage of this gap.”
The insurance gap is measured by looking at an individual’s assets and liabilities and determining the shortfall, according to PLIA. A life insurance policy is then used to fill the gap, injecting cash into the estate of the insured when he passes away.
Vergel de Dios said more effort has to be poured into educating the public about the importance of insurance, given that many still do not understand its value.
He stressed that the public must be informed that an insurance is something tapped not for personal gain but for loved ones “in case of unforeseen events.”
“Changing this mindset is essential for increasing insurance penetration in the Philippines,” he said.
Based on the PLIA’s figures, insurance penetration in the Philippines amounted to only 1.2 percent of the population in 2023, only higher than Indonesia’s 0.8 percent, but much lower than Vietnam’s 1.7 percent, Thailand’s 3.4 percent, Malaysia’s 3.7 percent, and Singapore’s 7.4 percent.
The target market for insurance includes young families, single parents, and singles who are heads of families.
On Tuesday, the PLIA unveiled a consumer study that mapped the Filipino consumer behavior on insurance, as the PLIA marked its 75th anniversary.
Conducted by NielsenIQ, the PLIA Philippine Understanding of Life Security & Envisioned Goals (PULSE) 2024 is the first consumer study of its kind undertaken on such a large scale. It is “intended to serve as a benchmark for measuring future progress,” the PLIA said.
The study was conducted online from October to November 2024, targeting respondents who are aged 21 to 60 and who had recently purchased or were considering purchasing life insurance.
“The study revealed that risk protection remains a core priority for Filipinos, with 9 in 10 respondents believing that insurance is important, with 6 in 10 viewing it as a necessity,” the PLIA said.
“The research also highlighted the growing role of both traditional and digital touchpoints in the purchasing journey. While face-to-face interactions remain important, digital platforms are becoming more influential, particularly among younger, tech-savvy demographics,” it added.
“In addition, consumers prefer easy-to-access resources on life insurance, such as video tutorials and webinars, to help them understand the options available,” the PLIA also said.
The study, however, showed that when it comes to digital channels, trust is still a major hurdle.
Consumers are concerned about the safety and credibility of online insurance platforms, especially in areas like security of applications and claims processing, PLIA noted.
“Customers also prioritize access to customer support, ease, and speed of securing life insurance. Pricing is a critical factor as well, with consumers seeking policies that provide value for money,” it said.
