MANILA, Philippines - The bicameral congressional committee has picked last week the Senate version proposing to reduce the burdensome five-percent premium tax on life insurance policies to just two. It will now be sent to Malacañang for signing into law.
The Senate version, authored by Sen. Panfilo M. Lacson, likewise proposes the reduction of the documentary stamp tax (DST) on life insurance policies pegged at 0.25 percent of premium paid to a fixed one-time rate ranging from zero to a maximum P100 per policy.
Not adopted was the bill from the House of Representatives seeking to abolish the five-percent premium tax altogether.
As of 2007, the per capita expenditure on life insurance was a measly P859.20, covering only 13.63 percent of the entire Philippine population.
Majority of the insurance issued are group insurance, which gives lower terms rather than the individual policies. It is likewise estimated that only three to four percent of the country’s population have individual policies.
“Part of the reason for the low penetration rate is the five-percent premium tax plus the DST,” Victor Quisumbing, president of the Philippine Life Insurance Association (PLIA), said. He is also the president and chief executive officer of the Great Pacific Life Assurance Co. (Grepalife).
PLIA and the Insurance Commission (IC) have been working to bring the penetration level to 20 percent of the country’s population since the start of the century. But the refusal to lower if not remove the premium tax, and other external factors like the poor investment climate, global credit disaster and natural disasters, have made insurance unreachable to majority of the population.
Majority of the Asean nations have penetration levels at the high double digits while Singapore, Taiwan and Hong Kong have penetration levels in the 90-percent vicinity. In fact, Japan reports that it is common for their citizens to have two or more policies. — TPT