Lower taxes for non-life protection will help Filipinos become more financially secure, especially agricultural workers and other lower-income earners, the Philippine Insurers and Reinsurers Association (PIRA) said.

In a recent media briefing by PIRA members, Malayan Insurance chief operating officer Denden Tesoro said non-life insurers are charged with 27.5 percent tax. She said companies hope the tax will be reduced to 20 percent in the near to medium term.

This is still much higher than eight percent of some countries in Southeast Asia, PIRA executive director Michael Rellosa said.

He said the government can lower taxes to non-life insurers to initially reduce prices for poorer groups like farmers while freeing up some government funds for other critical public services.

“We’re here to help share the burden. If we create a pool, if the private sector writes agri-insurance, maybe we can pull down the risks and the rates,” he said.

Tesoro added non-life insurers are interested in diversifying their products beyond auto and property insurance and cybersecurity to ensure minimal profit losses.

“I’m sure many of the private companies would like to try offering products to the agriculture sector. We’d like to spread the risk. That’s a whole idea of insurance because there could be one bad year,” she said.

4th CTRP eyed

Rellosa said PIRA continues to discuss with government agencies the challenges among non-life insurers in crafting the Passive Income and Financial Intermediary Taxation Act under the government’s fourth package of the Comprehensive Tax Reform Program.

He added PIRA is exploring other ways to help the less privileged become insured, such as becoming a reinsurer of the state-owned Philippine Crop Insurance Corp. or providing a substantial portion of funds to more profitable agriculture sub-sectors to balance non-life portfolios.

Companies tend to not develop agriculture insurance products due to farm production’s unpredictable revenues which depend on weather conditions.

“There are profitable areas like livestock insurance which could increase interest in agriculture insurance,” Rellosa said.

According to PIRA, the acquisition of non-life insurance remains low in the country at 0.4 percent penetration rate.

Source - https://tribune.net.ph