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PIONEER
Insurance, a 50-year-old mid-sized insurer, yesterday
renewed calls for the reduction of “heavy” taxes imposed
on insurance firms, saying these will only mean lower
returns for the companies and also result in higher
policy cost for clients.
“We feel
strongly about the taxation issue. We’re heavily taxed,
one of the most heavily taxed. It’s going to make it
very tough for the companies and the consumers. The
government is taxing us left and right, clients will be
upset,” said Molly Uyecio, Pioneer executive vice
president and chief financial officer, in an interview
at the sidelines of the launching of Sparx, the firm’s
new product.
Uyecio
said insurance firms are also moving for the removal of
taxes on commissions that is included in the computation
of the corporate income tax. Corporate income tax, is 2
percent of the corporate gross earnings of the year.
“We wish
there will be no new taxes, and that there will be a
reduction in premium tax, as well as in documentary
stamp tax,” she said.
Pioneer
president and chief operating officer Lorenzo Chan Jr.
said that because of the heavy taxation, the firm was
forced to reprice its products. “Because of the high
taxes, we repriced last year. The clients, of course,
were surprised,” he said.
Early
this year, the Philippine Life Insurance Association
clamored to abolish or reduce the premium tax to
increase business and make life insurance more
affordable.
Its
officials pointed out that the local industry is heavily
taxed unlike in neighboring countries.
The
group has submitted a proposal to amend tax laws to the
Insurance Commission, the Department of Finance and
Congress.
The
Philippines charges a 5-percent tax on yearly gross
premiums, which is not the practice in the rest of
Southeast Asia.
Life
insurers see this as a tax on capital, or an
individual’s savings, and not on the interest earned by
the amount.
This is
on top of additional taxes imposed on the earnings of
long-term savings with an insurance
company—corporate-income taxes and investment-income
taxes equivalent to a 20-percent tax on interest income,
as well as capital-gains tax, real-estate tax and other
similar taxes.
The
industry has also been complaining of the documentary
stamp tax, which, in some cases, is actually higher than
the amount of premiums received.
The
stamp tax is 50 centavos for every P200 assured. There
are also municipal taxes of varying amounts and
percentages.
George
Mercado, the group’s former president, earlier said the
abolition of the premium tax would allow local insurers
to become competitive against others in the region.
Also, in
an interview at the sidelines of the product launch,
Insurance Commissioner Eduardo Malinis said the
commission and representatives of the insurance industry
plan to meet with the finance department. He did not
elaborate.
Meanwhile, Sparx is a microsavings and insurance product
targeted at children below one-year-old to 14 years.
Adults up to the age of 54 can also avail themselves of
the product, which has a maturity when the depositor
reaches 64.
Dubbed
as “insurance in a sachet,” a Sparx card costs between
P300 to P5,000 per card.
Chan
said Sparx was designed to “simplify” insurance and to
penetrate a wider segment of the population. Primarily
designed for children, the product promises to “spark” a
savings habit among children.
Sparx
promises a settlement of claims within 24 days, as well
as easy registration via the Pioneer call center and its
web site. It, however, does not cover hospitalization in
case of illness or accident.
Deposits
can be made through branches of Banco de Oro, Bank of
the Philippine Islands, Union Bank, China Trust, and
7-eleven convenience stores. Chan said the firm will
also be testing the product on selected Petron gasoline
stations.
The firm
has also tied up with Blue Cow Publishing, which
produces the children’s comic book Private Iris to
promote the product.
In 2007
most of the firm’s income was drawn from traditional
products despite the introduction of variable life
insurance later in the year, Chan said. “Insofar as the
financials are concerned, 2007 is a growth year over
2006. Most of the growth was spurred by traditional
products despite the fact that we introduced variable
life toward the end of the year. This year we expect
income to come from traditional products and variable
life and, later on, from Sparx because it is still new.”
“Sparx
income is expected to be relatively conservative, but in
the medium term significant,” he added. |
