Insurance commish urges cut on taxes

Insurance Commissioner Evangeline C. Escobillo vowed to lead an aggressive campaign to pressure law makers to cut down the mounting taxes currently imposed on insurance companies, to push the growth of the industry.

In her visit to Cebu early this week, Escobillo admitted that one of the reasons why the Philippine insurance industry is moving in a very slow pace is that it is one of the "heavily taxed" industries in the country.

For years now, the insurance industry has suffered from stagnant growth, as the level of acceptance of Filipinos to insure is not as developed as in other countries.

Thirty years ago, the Philippines was included in the top three countries in Asia in terms of industry performance. Escobillo said, because of the Philippine government was not able to adopt changes in terms of providing conducive industry atmosphere, the Philippines is now left behind.

Although, it would take years to convince law makers to revise the current insurance code, which has been based on the 1935 American Insurance Code, including the cutting off of some unnecessary and duplication of administrative and tax fees, Escobillo asked the members of the Life UnderWriters Association of the Philippines (LUAP-Cebu) to put more effort to advocate for the revising of the "outdated" Philippine insurance code.

"We have to make noise. There must be something to be done in the taxation of the insurance industry," Escobillo said.

Although, she warned, that this move is anchored largely on strong belief and active campaign from different sectors considering that its is very difficult to persuade the government to cut the taxes on the insurance industry, because it direly needs money.

In the last few years, pre-need companies have been hounded by several crises, including bankruptcy problems, which contributed to the decline in the confidence of Filipinos on the industry in general.

Only about 10 to 15 percent of the more than 80 million Filipinos are now covered by insurance both life and non-life. Escobillo said the thrust of the Insurance Commission (IC) now is to "raise the bar" to hit at least 20 percent of Filipinos covered by insurance in 2007.

LUAP had been urging the government to sincerely consider the issues faced by the insurance industry, especially on taxation.

In an earlier interview, LUAP national officer Nenette N. Aseniero said the life insurance players have difficulties to reach out the supposedly "fertile" market in the Philippines, because they cannot cut the cost of their product to stimulate consumers, because of high cost of premium.

"Too many taxes, that's why hindi na affordable ang product namin to most Filipinos," Aseniero said.

There are close to 40 life insurance companies in the Philippines.

Before the year 2000, the insurance industry, including life insurance projected to expand its market penetration to cover at least 20 percent of the over 80 million Filipinos.

However, Aseniero said the growth movement of the industry has freeze in the last few years. There was even a year that it plunged because of the unattractive premium cost.

"We just have to continue campaigning, and not give up on pushing for reduced taxation in the industry," Escobillo challenged Insurers in Cebu.