THE United Nations Office for Disaster Risk Reduction (UNISDR) and the Philippine Insurers and Reinsurers Association (Pira) have proposed several measures to help Filipinos become more prepared in mitigating the risks that natural disasters pose to their lives and livelihood.
At the First Philippine Insurance Forum on Strengthening Disaster Resilience in the Philippines, the UNISDR and Pira have sought the government’s help in ensuring that Filipinos have some form of insurance cover to help them cope and recover from natural disasters, like Supertyphoon Yolanda (international code name Haiyan) that devastated provinces in the Visayas last year.
The Haiyan’s Post Disaster Needs Assessment Report released by the UNISDR in April 2014 said the damage wrought by Yolanda amounted to P89.59 billion, or approximately $2 billion.
Pira Chairman Emmanuel Que said one of the biggest hurdles preventing Filipinos from buying insurance cover against natural disasters is the high cost of insurance policies attributable to high taxes imposed by the government on nonlife-insurance products.
The premium tax rate of 25 percent to 27 percent imposed on nonlife-insurance products is already the highest in the world, Que said.
Vietnam, which imposes the second-highest tax on nonlife-insurance products in the Asean, exacts a premium tax of only 12 percent. Singapore imposes a premium tax rate of 7 percent on nonlife products.
Que said stakeholders should demand for a reduction of taxes on nonlife-insurance products so that the insurance cover for persons whose livelihood are vulnerable to natural disasters become more affordable.
Another proposal that came up during the forum was exempting policyholders from the tax on premium those who wish to have catastrophe insurance cover.
It was proposed that the tax exemption form part of the discussions when the mandatory review of Republic Act 10121, or the “Act Strengthening the Philippine Disaster Risk Reduction and Management System,” is convened.
Insurance Commissioner Emmanuel F. Dooc, who also participated in the forum, supported the proposals to reduce the tax on nonlife-insurance products, although he said the proposed tax exemption on catastrophe insurance would have to be tackled in a separate bill at the House of Representatives.
Dooc said there is also a pending bill in Congress that seeks to reduce the tax on nonlife-insurance products, from the current rate of 27 percent to around 10 percent.
Pira Vice Chairman and Spokesman Michael Rellosa said that another strategy that insurance and reinsurance companies are undertaking is the awareness program among Filipinos to educate them on the value of insurance protection.
The penetration rate of insurance in the Philippines, which is the ratio of premium collections in relation to the gross domestic product, is 1.9 percent. But market penetration in the Philippines, or the actual number of Filipinos who have some form of insurance coverage in relation to the population, is about 28 percent.
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