Inclusivity still a challenge despite digital growth in PHL insurance sector: Experts

Industry experts shared how inclusivity is not just about access but also about financial sophistication. 

The Philippine insurance industry is grappling with the urgent need to modernise through digitalisation and inclusivity, whilst combating a steep decline in market penetration, now below 2%, and navigating increasing demands for sustainability and better consumer education.

In a panel session about the future of the insurance industry, experts told the 286 attendees at the Asian Banking & Finance and Insurance Asia Summit, held on 1 October at the Makati Shangri-La, Philippines how digital transformation, inclusivity, and sustainability are reshaping the sector. 

The rise of digital transformation is a key trend in the insurance industry, particularly in the wake of changing consumer behaviours. 

As Caesar V. Parlade, managing partner for Advisory and Digital Transformation Solutions, Reyes Tacandong & Co, the panel moderator, pointed out, technology is not just a tool but a fundamental change in how companies operate. "We've seen a continuing trend towards digital transformation and how that is impacting the expectations of our customers," he noted. 

Lester Cruz, chief executive officer (CEO) of Singlife Philippines, emphasised that for an all-digital, mobile-first company like Singlife, speed and customer experience are non-negotiable. “Solutions and any engagement that needs to be done with the customer have to be instant,” he said. 

Customers expect not only fast service but also easy-to-understand products. “If it’s not understandable enough. It defeats the entire purpose of digitising the solution,” Lester added.

Meanwhile, Raoul Antonio Littaua, president & CEO of Insular Life, highlighted how technology allows for efficiency, especially in processing microinsurance. 

However, he raised a critical point: “Yes, digitalisation makes inclusion possible but not inevitable.” Digital platforms may widen access, but to truly include underserved populations, companies must address broader issues such as affordability and awareness.

Challenges in inclusivity

Inclusivity was another focal point of the discussion. Insurance has traditionally been seen as inaccessible to certain groups, particularly in the context of gender and sexual orientation. 

Cruz acknowledged that whilst the Philippines allows coverage for domestic partners, more needs to be done. 

“At the end of the day, so long as the insurable interest is truly there. It should be allowable,” Cruz said, referencing the need for policies that cover same-sex couples and non-traditional families.

Littaua echoed these sentiments, stating that at Insular Life, inclusivity extends to ensuring access for women and individuals with managed health conditions. 

“Even if you are diabetic and it’s well-managed, we accept you for insurance,” Littaua shared. This approach highlights a growing trend of making insurance, not just a financial product but a service that reflects the diverse needs of modern society.

Despite these efforts, challenges remain. As Cruz pointed out, inclusivity is not just about access but also about financial sophistication. 

“Does having a simple product or a bank account make you financially included already? I’d say that we’ll eventually have to move towards financial sophistication,” he argued. This requires breaking down complex financial concepts into relatable solutions that consumers can understand and use.

Microinsurance: Addressing the underserved

Parlade noted the importance of microinsurance for farmers and low-income individuals, particularly in rural areas. 

However, as Cruz stated, the definition of microinsurance in the Philippines often focuses on price rather than value. “Is it really a question of microinsurance as the first access point for customers in terms of pricing? Or is it the value?” he asked.

Singlife, for instance, has products that fall within the definition of microinsurance, but Lester argued that the focus should be on making insurance meaningful. 

“At the end of the day, it’s about making the solution meaningful enough for the customer for the price that they pay,” he said. This approach shifts the conversation from merely offering low-cost products to ensuring that those products deliver real value to the customer.

Littaua raised another important issue: who benefits from microinsurance? In many cases, microinsurance is tied to microlending, where the primary beneficiary is the lender rather than the borrower. 

“Who are we protecting? Is it the person or the lender?” Raoul asked, highlighting the need to reassess the purpose and structure of such products.

The path forward: Education and awareness

The panellists agreed that one of the biggest hurdles the industry faces is education, in closing. Despite advances in technology and inclusivity, many consumers still do not fully understand the benefits of insurance. Cruz re-emphasised the need for education: “The biggest burden and hurdle we’re trying to overcome today is education.” 

Prahlad Agarwal, CFA, chief of staff & head of Strategy at Manulife Philippines pointed out that health insurance, in particular, has a significant role to play in addressing the gap in health coverage in the Philippines, where out-of-pocket expenses exceed $8b. 

Insurance companies must focus on filling this gap by offering affordable and accessible health protection.

Ultimately, as Anthony Louis Gunzon, chief marketing officer of Malayan Insurance Co., Inc., concluded, it is not about scare tactics or complicated marketing strategies, but about being present at the right time and offering products that meet consumers' needs. 

“It’s about being there during the right moment,” he said, summarising the key to effective insurance marketing.