Government urged to consider tax relief on insurance premiums

MANILA, Philippines — A tax relief measure on insurance premiums in the Philippines could boost overall coverage in a country that still has a very low level of social protection penetration.

In an interview with The STAR, Prudential plc CEO Anil Wadhwani, the parent firm of leading insurance company Pru Life UK, said proper incentives could serve as a significant accelerator in insurance penetration.

As of end-2024, the share of the insurance sector to the country’s gross domestic product (GDP) still remains below two percent.

“There are other jurisdictions that provide tax incentives for insurance premiums. We have seen a direct correlation of that with greater participation and greater penetration,” Wadhwani said.

“To the extent that the government can provide greater incentives for Filipinos to purchase insurance and have greater coverage, I think that’s phenomenal,” he said.

Unlike in neighboring Singapore and Malaysia, the Philippines has no tax rebate system for the insurance industry.

The closest reform would have been the remaining tax reform package under Passive Income and Financial Intermediary Taxation Act (PIFITA) which reduces the premium tax rate of pre-need, life and health insurance from five percent to two percent.

PIFITA, however, has already been consolidated with the Capital Markets Efficiency Promotion Act with the latter listed under the priority bills of the Legislative-Executive Development Advisory
Council.

“It (tax relief) does not only benefit the end-consumer, but the overall economy. Insurance is a long-term business and it kind of becomes a catalyst to invest and support broader economic growth,” Wadhwani said.

“There is a significant role for private insurers in helping drive the objectives that the government is trying to accomplish. It not only helps individuals get better protection and be more prepared to deal with eventualities, but also it’s a key catalyst for driving economic growth,” he said.

Pru Life UK president and CEO Sanjay Chakrabarty, for his part, said the company and the entire umbrella organization of life insurance firms are in constant dialogue with
regulators for such measures.

Prudential operates across nine Southeast Asian markets including Indonesia, Malaysia, Singapore, Thailand, Vietnam, the Philippines, Cambodia, Myanmar and Laos.

Its agency force comprises more than 40,000 active agents monthly, supported by over 200 bank partners including strategic alliances with Standard Chartered  Bank and United Overseas Bank.

On the local front, Pru Life UK posted P9.8 billion in new business annual premium equivalent last year, securing the top market position with a 15-percent share.