AIA bats for tax rebate on insurance

MANILA, Philippines — A tax relief measure on insurance premiums in the Philippines is seen boosting overall coverage in a country that remains to have a very low level of penetration for social protection.

During the launch of AIA Investment Management and Trust Corp. Philippines, AIA CEO Kelvin Ang said there has been an increase in demand for insurance over the past five years, especially after the pandemic.

Ang said a 60-percent rise has been noted in terms of the numbers of insured in the country and this could still increase given rising awareness.

“I believe that insurance protection, healthcare or long-term care will continue to outrun the GDP (gross domestic product),” Ang said.

“Also the demographic dividend, we have more young people. The macro structure of the country will support the growth,” he said.

While insurance coverage in the country has improved, this remains low when compared to other neigboring economies.

Ang argued that it takes a lot of work to increase the penetration, and that financial literacy should be continued and promoted.

As of now, insurance penetration remains at around two percent of GDP.

To address this, Ang said the government may consider a tax relief on insurance premiums similar to what Malaysia is doing where a rebate is provided to yearly premiums.

“We have suggested it already, we continue to lobby for this, but with the BIR (Bureau of Internal Revenue), it takes time,” Ang said.

Such a measure will need legislation to be executed by the BIR.

“It has not moved, it’s a big country and there are many priorities. And insurance doesn’t normally get the high priority,” he said.

Meanwhile, AIA Philippines introduced its Hong Kong-based affiliate AIA Investment Management that will cater solely to its fund management needs.

AIA Investment Management specializes in long-term investing, with focus on sustainable themes and return sources.

The firm recently launched various unit investment trust funds that will be accessible to the customers of AIA Philippines through the new AIA Peso Adventurous Fund, AIA Peso Balanced Fund, and AIA Peso Conservative Fund.

AIA Philippines chief investment officer Lee Longa said such funds were designed to address the various needs and risk appetite for customers.