This week in insurance: Philippines protection gap flagged, cyber risks intensify, insurers push simpler products

The country’s life insurance penetration is only at 1.8%.

Leaders and policymakers in the Philippine insurance industry highlighted major structural challenges and opportunities this week, including a large protection gap, low insurance penetration, rising cyber risks, and more.

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.

Many financial service providers— particularly insurers— believe that the ultimate product is a building block, where customers have a base that they can add on as their needs grow. But the experience of how Filipinos avail an insurance policy does not match this product.

“Has anyone ever built a product for themselves when buying insurance?” Jose Eduardo Ang, chief product & innovation officer at Insular Life, asked attendees of the summit.

Insurers should strengthen governance and operational controls as cybercrime remains the biggest threat facing the industry globally, according to Alvin Dave Pusing, director for financial services and risk consulting at PwC.

Cybercrime has been the top risk — or what Pusing calls a “banana skin” — since 2023, he said at the summit.

From a regional perspective, cybercrime ranks number one across Europe, Asia-Pacific, North America, and Africa, he said.

The Philippine insurance sector has an opportunity to strengthen trust and expand financial inclusion by improving how it identifies and supports vulnerable customers, said Karen Jill Espineli, chief compliance officer and general counsel at AXA Philippines.

The "toxicity of success" and a persistent tendency to view the future as a distant concept are amongst the biggest barriers to insurance firms becoming truly future-ready.

Jonathan Juan “JJ” Moreno, incoming CEO and country head of Sun Life Philippines, argued that the industry must move beyond a "propensity to delay" and instead pivot from "merely digitising" to decisive action, noting that "the future is already here" and the only variable is whether leaders are acting accordingly.

Insurers need to simplify products and make them easier for customers to understand if they want to expand coverage, industry executives said during the a panel in the summit.

Product development is always customer-centric, according to Arnolfo ‘Nol’ de Leon, chief agency office at FWD Insurance.

Anthony Louis Gunzon, chief marketing officer of Malayan Insurance Co., Inc., said affordability should be considered in the context of when customers actually need protection.

“Affordability definitely goes beyond pricing,” Gunzon said. “What stands out is the ‘moment of truth’—when the product is embedded in the customer’s journey.”