In an era of uncertainty, insurance serves as a vital safeguard against financial repercussions from unexpected events. From health crises to natural disasters, accidents, and liability concerns, insurance provides resilience in the face of uncertainty.

The dual benefits of protection

Highlighting the dual benefits of protection, both financial and emotional, it helps provide monetary safety for loved ones after death or critical illness, offering peace of mind.¹

The dynamics of the Philippine insurance industry

In the Philippines' insurance industry, the numbers for the first quarter of 2023 indicate that total assets, net worth, invested assets, and premiums have gone up. However, the level of insurance usage (density) and its impact on the economy (penetration) remain low.

As of Q1 2023, the average individual spending on insurance is P872.56, and the insurance sector's contribution to the country's economy is at 1.75%. To put it simply, density reflects how much people spend on insurance individually, while penetration shows how much the insurance industry contributes to the overall economy.²

Financial literacy and access to protection in the Philippines

In 2014, Standard and Poor's (S&P) reported that the Philippines ranked third to last in financial literacy among eight ASEAN countries, with only 25 percent of adults considered financially literate.³

Financial literacy is understanding various financial skills, including personal financial management, budgeting, and investing.

The Insurance Commission aims to enhance financial literacy, ensuring more Filipino families are covered by insurance to help guard against financial emergencies.

Kelvin Ang, CEO of AIA Philippines explained, "Insurance is always a top priority, but more need to be educated and informed about the importance of it. A good financial advisor is important. Someone who knows how to advise a customer of the options available."

In 2021, during the height of the pandemic, there were roughly 21.7 million newly insured people in the Philippines with life insurance, reflecting an increase from the previous year.⁴

"The pandemic has caused some changes in the trend, what I am seeing is the demand for more innovative products. Things have changed," expressed Ang.

"For AIA Philippines we are now working on a financial literacy program. We are also working to expand our distribution that means more financial advisors, working harder with our bancassurance partner, BPI, and widening the distribution to e-commerce," he added.

Karen Custodia, Chief Executive Officer of BPI AIA, the bancassurance arm of AIA Philippines and joint venture with BPI, further expounds: "Bancassurance plays a major role in ensuring that protection becomes accessible to more Filipinos. By making BPI AIA protection and long-term savings solutions available to BPI clients inside the bank, we are able to help save more lives, protect more families and secure the future of so many others."

Striving to be better

AIA Philippines, formerly Philam Life, has undergone a transformative journey in its 76-year history. The rebrand, which happened in 2021, aligned it with its Hong Kong-based parent company, AIA Group, signifying a commitment to innovation and accessibility.

"We rebranded, and that rebrand promised that AIA is going to be bigger and better. We are now a combination of four companies. The outlook of the insurance industry remains positive with the opportunity to provide more protection and long-term savings for Filipinos," said Ang.

The integration of subsidiaries, including BPI AIA and MediCard, positions AIA Philippines as a comprehensive provider of protection, long-term savings, and healthcare solutions.

Two-in-one insurance solutions

In the 2000s, variable unit-linked insurance products (VULs) gained popularity.

These are two-in-one insurance solutions that provide protection while also investing the customer's money in funds connected to various financial instruments.

While the returns are not guaranteed and dependent on the performance of the funds, this keeps customers protected while allowing their money to maximize its growth potential.

For AIA Philippines, the funds accessible through VUL products offered are managed either by experts from AIA Investment Management Singapore for global funds, or its wholly owned fund management subsidiary, AIA Investment Management and Trust Corporation Philippines (AIAIM Philippines) for local funds.

"We leverage on the extensive expertise and robust infrastructure of our regional investment group, which boasts centers of excellence situated in Hong Kong and Singapore. Operating across 18 markets, our Group Investment collaborate seamlessly with best-in-class global fund managers to develop investment solutions for the AIA customer. By adhering to a consistent and disciplined approach, we harness the collective capabilities to deliver consistent, reliable and sustainable returns on a long-term basis to our customers at AIA Philippines," Pacis added.

"By combining our understanding of the local market with the global capabilities of our parent company, our overarching objective is to develop superior investment solutions of the highest caliber that are most attuned to Filipino needs."

As of end of 2022, AIAIM Philippines manages P155.6 billion in assets, exclusively handling fund management for AIA Philippines and dedicating resources to manage its peso assets.

Live healthy, longer, and better lives

The acquisition of MediCard enhances AIA Philippines' ability to offer personalized health insurance with broad coverage.

"With MediCard a part of AIA Philippines, we are able to do more, expand the services and solutions we can offer towards fulfilling our Purpose—and hopefully be a game changer to make healthcare in the Philippines more accessible, affordable, and effective," said Ang.

"Our extensive medical service network of over 2,000 partner hospitals and clinics, and 27 high-quality MediCard-owned clinics located in key cities across the Philippines allows us to offer a broad suite of services across primary care, diagnostics, laboratory tests, and minor surgeries to our customers," explained Julian Mengual, MediCard Philippines Chief Executive Officer.

"As part of the AIA Philippines group of companies, we are in the best position to offer integrated health insurance and healthcare products to customers, supporting them at every stage of their journey," he added.

The combined strength of AIA Philippines, BPI AIA, AIAIM Philippines, and MediCard allows the company to fulfill its Purpose of helping Filipinos live Healthier, Longer Better Lives.

"The affordability of products is also important. We need to come up with more varied solutions that are accessible to more Filipinos so that everyone can be protected, have the means to save for the long- term, and get better healthcare," concluded Ang.

To learn more about AIA Philippines visit their official website.

References:
1. Fontinelle, A. Top Benefits Of Life Insurance. Forbes Advisor. © 2023 Forbes Media LLC. All Rights Reserved.

2. Insurance Commission. (2023, August 11). Insurance industry’s efforts to advance financial literacy and improved access to financial services cited at Cebu convention.

3. Shin, J. (2023, August 1). Teachers' Financial Education to Raise Pinoys' Financial Literacy. NATCCO.

4. Statista. Number of newly-insured people in the Philippines from 2016 to 2021.