Pira pushes tax exemptions on microinsurance

MANILA, Philippines - The Philippine Insurers and Reinsurers Association (PIRA) is asking government for tax exemptions on microinsurance products.

Speaking at the launching of the Regulatory Framework for Pro-Poor Insurance (RFPI), PIRA chairman Michael F. Rellosa said making insurance accessible to the greater population means microinsurance product must be affordable.

“You might want to scrap all the taxes on microinsurance all together to make it more affordable,” Rellosa told regulators.

Removing the burden on microinsurance products ensures an environment of lower premiums, as against the present situation of the non-life insurance industry.

Roughly 25 percent of the premiums being paid on non-life insurance products are various national and municipal tax forms, the highest in the region.

In fact, PIRA is seeking Congress’ approval to reduce it to less than half.

However, the non-life insurers placed more urgency on microinsurance in the face of worsening climate change and the prevailing El Niño weather phenomenon.

Poverty should not be an excuse for not buying insurance. 

“On the contrary, we insist that poverty should be a reason to buy insurance,” Rellosa said.  

The rich buy insurance because they know they need it. Yet they are the ones who can recover easily from a catastrophe since they have savings and other assets to depend on. 

“But the poor? They have nothing. If a catastrophe wipes out whatever asset they may have as has happened during the Typhoon Yolanda, they have nothing else,” he explained.

Long before the term “microinsurance” became a buzzword, non-life insurers and a handful in the life sector, have developed affordable insurance for the lower income segment of society.

Today, there are 22 member companies of PIRA that offer microinsurance as it is known today. There are 69 non-life insurers recognized by the Insurance Commission.

“These companies have seen the potential of microinsurance.  They see what economists label as the “fortune at the bottom of the pyramid,” Rellosa, who is also chairman of the Asean Insurance Council, said.

Without a tax burden on microinsurance, more insurers will definitely join the bandwagon. And that would mean more lives, property and livelihood can be protected.