Savings vs. shocks: Why a $400b gap threatens PH’s financial future

Pru Life UK warns that without insurance, traditional savings and investments are a "complete waste of time."

The Philippines faces a $400b protection gap—roughly equivalent to its entire gross domestic product—posing a fundamental challenge for the insurance industry, Pru Life UK President and CEO Sanjay Chakrabarty said.

Speaking at the Asian Banking & Finance and Insurance Asia Summit – Philippines on 10 March, Chakrabarty, representing the broader insurance industry, “bared the soul” of the sector to argue that the democratisation of wealth is impossible without first establishing financial resilience.

With life insurance penetration at just 1.8% and medical inflation climbing at 14%, he warned that the underserved and lower-middle-class segments remain “susceptible to shocks” that can wipe out a lifetime of savings in a single incident.

Chakrabarty acknowledged a persistent “push and pull” between the profitability of the wealth landscape and the resources required for microinsurance. Despite the availability of products priced as low as around $5 (PHP300), he admitted the industry has “all struggled” to drive adoption.

He cautioned that ignoring this segment undermines the entire financial ecosystem. “If you don't have that protection, which is foundational to your financial well-being, then it's all a complete waste of time,” he said, stressing that savings or investment products lose much of their purpose if a person’s nest egg is unprotected.

A significant business case for closing this gap lies in the $10b currently spent out-of-pocket on medical expenses in the Philippines.

Chakrabarty noted that, whilst insurance lacks “instant gratification” and can feel like “wasted” money if no claim is made, it serves a dual purpose: accumulating premiums to support national infrastructure and alleviating pressure on government agencies.

He urged the finance community to stop treating protection as an “add-on” for those with “excess funds left over.” Instead, he emphasised that insurance is foundational to financial well-being and that education and trust-building are essential to ensure underserved consumers understand its importance. “Protection is not an add-on,” he concluded. “It is absolutely foundational.”