MANILA, Philippines — The Insurance Commission (IC) should review its existing framework that restricts firms from selling policies to overseas Filipino workers (OFWs) amid the limited social protection for the sector.
During the launch of the latest policy paper by law firm Quisumbing Torres and insurer Pru Life UK yesterday, the parties called on the government to review existing regulations on selling insurance policies to OFWs while they are working abroad.
Current regulations require OFWs to be physically present in the country to complete a purchase of life protection products from local-based companies.
There are close to two million OFWs abroad contributing $135 billion in remittances or roughly 10 percent of the economy.
However, a huge chunk of them do not have social protection that was only highlighted by the pandemic.
According to Alain Charles Veloso, Quisumbing Torres partner and head of banking and finance group, life insurance products should be made available to OFWs even while they are working abroad to improve financial inclusion and social protection.
Veloso pointed out that the OFW market remains at risk of being left unserved and unprotected by insurance companies due to current regulatory restrictions.
Veloso called for the easing of rules on cross-border selling of life insurance to OFWs by recognizing reverse solicitation exceptions.
This would allow OFWs to purchase life insurance from local firms while they are abroad to help cover the risks that would be more prevalent as they return to the country in their retirement years.
“This is within the purview of the IC. They can pass additional circulars or liberalize the ability to cross sell,” Veloso said.
“Most OFWs are breadwinners who are finding other ways to ensure that their families are protected in the event something happens to them,” he said.
Further, the policy paper is recommending that the government enter into bilateral or multilateral agreements for passporting exemptions in OFW-heavy countries to enable local insurers provide financial services to OFWs even abroad. Such a measure is within the newly created Department of Migrant Workers.
However, Veloso said this could be the most difficult to achieve as entering into agreements requires cooperation with another jurisdiction.
“But these first two recommendations are most important because they require an action from the regulators and it will clarify or address any doubt or ambiguity as to the legality of insurance companies’ ability to sell,” he said.
Lastly, the paper also called for allowing financial education, marketing, and selling of life insurance to OFWs and their families through the use of technology.
A recent study showed that OFWs only utilize financial services to remit money and have no bank accounts or personal insurance.
“Their knowledge of financial services being offered by local companies is also very limited. The IC may consider allowing financial institutions to use their digital platforms to help OFWs understand the insurance products suitable for their needs,” the paper said.