THE INSURANCE Commission (IC) sees the number of clients surrendering their insurance policies remaining at normal levels despite the slowing economy as the pandemic highlights the need for protection in a country where the insurance penetration rate remains low.
Insurance Commissioner Dennis B. Funa, citing a report from the industry, said on Wednesday that insurers have not seen an unusual surge in cancellation of policies so far.
“To date, we have not experienced much surrenders. It’s very much at the same level as pre-COVID-19 period. We anticipate it to remain at the same level moving forward,” Mr. Funa said in a mobile phone message, quoting the report.
Mr. Funa said due to the ongoing pandemic, clients have seen the importance of protection, prompting them to allot money for insurance despite reduced incomes or lack of jobs amid slowing economic activity.
“It seems that is the situation across the industry. People will hold on to their insurance as long as they can because they know that is a protection they can rely on if the situation becomes worse,” he said.
The economy shrank 16.5% in the second quarter, plunging the country into a recession. The economic downturn has also caused hard-hit businesses to cut wages and lay off workers.
The country’s unemployment rate jumped 17.7% in April from the 5.1% recorded in the same month last year, or equivalent to a total of 7.25 million jobless Filipinos compared to the 2.27 million in April 2019, based on latest data.
Mr. Funa said policy cancellations will likely remain at pre-pandemic levels due to the country’s low insurance penetration rate.
“Maybe those that lost their jobs are among those that don’t have insurance in the first place. Mainly relying on their SSS (Social Security System) and PhilHealth (Philippine Health Insurance Corp.),” he said.
The insurance industry saw higher density last year, with the amount of premiums per capita at P2,812 in 2019, up 3.35% from P2,721 the year prior.
However, insurance penetration or the overall contribution of the insurance sector to the economy stood at 1.64% last year.
The industry posted an overall premium income of P304.639 billion in 2019, up five percent from the year prior. — B.M. Laforga