Tax reform to benefit insurance industry : IC commissioner Funa

“If they will have a bigger take home pay they will be planning for the future for their families or children and the micro sector is just there waiting for these wage earners,” he said. (Photo by Smartmae8 – Own work, CC BY 3.0)

MANILA — Insurance Commissioner Dennis Funa is optimistic of the impact of the first package of tax reform on the insurance industry since people will have additional disposable income.

Funa in a briefing Friday, said people would have more capacity to buy microinsurance with the implementation of the  first package of the Tax Reform for Acceleration and Inclusion (TRAIN) law this year, which gives workers’ first PHP250,000 annual income a tax free rate,

“If they will have a bigger take home pay they will be planning for the future for their families or children and the micro sector is just there waiting for these wage earners,” he said.

Data released by the Insurance Commission (IC) Friday showed that mutual benefit associations (MBA), where bulk of the entities that sell microinsurance belong, posted an 11.57 percent rise in total assets last year to PHP77.47 billion.

MBAs’ premiums totaled to PHP8.74 billion in 2017, up 16.89 percent from the previous year’s PHP7.48 billion.

Funa declined to give any numbers for the possible expansion of microinsurance sales this year but cited that to date there are around 32 million Filipinos who have microinsurance.

He said the poor are starting to realize the necessity of having insurance and slowly embracing the opportunities to get one for themselves.

This is where microinsurance comes in, he said, “because microinsurance makes insurance coverage more affordable.”

He noted that “it’s really difficult for big companies to sell micro because you have to go down to the barrios (municipalities).’

“The group that can really go down the barrios are the coops (cooperatives) and the MBAs that’s why the bulk of the sales of micro (insurance companies) are those sold by MBAs because they have a captive market,” he said.

“The only threat that I see in both the life and nonlife sector I would say a catastrophic incident, like (Typhoon) Yolanda or (Typhoon) Ondoy or an earthquake that will impact greatly on the nonlife sector,” he said.

“That is why we have the DOF (Department of Finance) having these initiatives on catastrophic insurance and we are working together with the DOF on these,” he added.

The insurance industry’s total assets rose by 17.89 percent  to PHP1.55 trillion in 2017 and premiums by 11.97 percent to PHP259.65 billion. (PNA)