The importance of the non-life insurance sector in the insurance industry is underappreciated!
Non-life insurance, in reality, would have a significant impact on the world of business and life in general if it did not exist. Loans for the building of industrial and housing projects, for example, would not be approved unless the assets were insured in the banks’ and other financial institutions’ favor to safeguard their mortgage interest.
Furthermore, contractors bidding on public construction projects are usually obliged to provide performance bonds in accordance with the contract. Marine cargo insurance, which is required by banks when granting Letters of Credit, is essential for the importation of critical capital equipment and necessary food goods such as rice.
The aviation sector is also required to acquire insurance for passenger safety. In order to receive a driver’s license, owners of motor vehicles must purchase liability insurance. Almost every aspect of the company necessitates the purchase of non-life insurance.
Automobiles acquired under installment plans are insured in favor of car dealers or banks on a personal level. Personal accident and health insurance are also available at a fair price.
Insurance Commission Official Report
According to the Insurance Commission’s official report, the non-life industry generated a gross premium of P57,479.0 million for the quarter ending September 30, 2021, a decline of 11.31 percent from the P64,830.6 million written in 2019. In terms of net premiums, 62 of the 66 non-life insurers earned P38,634.9 million, a slight decrease of 4.17 percent from the P40,137.7 million obtained in the same period of 2020.
Non-life insurers’ total assets increased by 9.92 percent to P274,496.9 million in 2019, up from P249,714.2 million in 2019. Liabilities, on the other hand, increased by 8.44 percent to P172,271.0 million from P158,858.7 million the previous year. As a result, the net worth grew by 12.51 percent. From P32,001.9 million to P37,131.0 million, the paid-up capital increased by 16.03 percent.
Non-life insurers make a significant contribution to the nation’s development, with investments totaling P1,558,125.2 million, a large portion of which is invested in government bonds and treasury bills. Despite the disruption created by the Covid-19 outbreak, the non-life industry has done well and has strong development potential, according to AM Best Rating Agency, which specializes in insurance company ratings worldwide.
Non-life insurance buyers, on the other hand, are subject to the following taxes: 12.5 percent documentary stamp tax, 12 percent VAT, and 0.5 to 0.75 percent local government unit tax.
In addition, policyholders of fire policies must pay an additional 2% fire service tax. Non-fire policies face a 24.5/24.75 percent tax, while fire insurance customers face a 26.5/26.75 percent levy.
These fees are in addition to the basic insurance payment. This is maybe Asean’s highest levy on policyholders who buy insurance to protect their houses, automobiles, or other valuables.
The non-life insurance industry anticipates a more advantageous tax treatment for buyers of property and liability policies following the ratification of Republic Act 11534, often known as the Corporate Recovery and Tax Incentives for Enterprises bill. We appreciate the Department of Finance’s contribution to the creation of the CREATE law.
Achievement as a whole
Congratulations to the insurance companies and the people who work for them for being imaginative and quickly reacting to the pandemic’s adjustments.
The IC, the commissioner, and the staff should also be commended for being quite receptive to the improvements offered by the sector. They extended the dates for submission of the required reports after realizing the initial problems in producing them.
The commission was swift to issue guidelines on online selling and servicing, allowing the industry to quickly develop its own methods.
All of these measures will ensure that companies continue to have an appropriate property and other insurance assets, which will be enhanced if non-life insurance taxes are decreased. The Philippine Insurers and Reinsurers Association (PIRA) continues to lobby for a one percent reduction in the documentary stamp tax each year for the next five years, lowering the cost to the insured.
PIRA is also aiming to eliminate the value-added tax on reinsurance transactions, which would make it easier to place large risks.
At some point in our lives, we all want to achieve financial freedom, and when it comes to achieving so, we often feel that saving is enough to be financially secure. However, if you look at life from a practical standpoint, you’ll see that saving money isn’t enough to achieve financial independence; you also need to protect your possessions with general insurance coverage.
Some people, on the other hand, believe that they don’t need non life insurance since they can save enough money to replace their assets if something happens to them. Consider a situation in which you are forced to wipe out everything you’ve worked for your whole life in order to pay for medical costs or an automobile that is beyond repair.
We must recognize the benefits that non-life insurance can give to the general public. It is undeniable that the non-life industry’s basic recognition is ignored. Let us applaud the companies’ current efforts to assist the general public.
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