Thursday, July 26, 2012

IC targets higher insurance penetration


Business World
Finance


Posted on July 24, 2012 09:12:15 PM

THE INSURANCE Commission (IC) wants to increase the penetration rate of insurance in the country to 1.5% within the next two years through the cooperation of the government and the private sector, its top official said yesterday.

“Our target is to increase our penetration rate to around 1.5% within the next two years,” IC Commissioner Emmanuel F. Dooc toldBusinessWorld on the sidelines of the 6th Asia Conference on Microinsurance yesterday.

The country’s insurance penetration rate -- insurance premiums as percentage of gross domestic product -- stood at 1.2% as of end-December, according to IC data.

“To achieve growth, we should see more activity from both the private sector and the government,” Mr. Dooc said.

“The private insurance sector has responded well to our call of increasing the penetration rate in the country by designing and marketing insurance products that promote big benefits in small packages at affordable cost, which are the microinsurance products,” he added.

The 6th Asia Conference on Microinsurance, with its theme of “Microinsurance as a Growth Catalyst for Insurance to Reach out to the Masses,” gathered microinsurance experts in the region to assess and exchange information on the state of microinsurance across Asia.

“We have to treble our production to be at par with our Southeast Asian neighbors which have an average penetration rate of around 3%,” Mr. Dooc also said.

“A lot of financial literacy programs need to be done and companies must continuously innovate and develop products targeted to the poor.”

The IC chief said microinsurance will help increase the insurance penetration rate in the country given its large market potential.

IC data showed that a total of four million microinsurance policies were sold last year.

Insurers at present are allowed to design their products in line with their target market’s demand. Their products are considered microinsurance products as long as they comply with the IC’s definition for such products.

According to Insurance Memorandum Circular 1-2010, microinsurance products are those whose daily premiums do not exceed 5% of the current daily minimum wage rate of non-agricultural workers in Metro Manila.

Furthermore, the maximum sum of guaranteed benefits should not be 500 times the daily minimum wage rate for non-agricultural workers in Metro Manila.

As of April this year, 18 insurance companies were allowed by the IC to sell microinsurance products. -- Ann Rozainne R. Gregorio


1 comment:

  1. Very informative message. Thanks for this.


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