TO PROTECT families from the consequences of adverse events such as death or disability of income earners, the life insurance industry is rapidly developing.
Overseas insurance companies have been attracted to the Philippines and are establishing a foothold here. Two recent examples are Hong Kong-based entity FWD and German company Allianz. Both companies have formed alliances with banks: FWD with Security Bank in 2014 and Allianz with PNB in 2016. Steady growth has been achieved, in line with good growth and prospects for the industry.
President and CEO of Allianz PNB Life Insurance Inc., Olaf Kliesow has recently become president of the Philippine Life Insurance Association Inc. (PLIA), the umbrella organizations of 30 life insurance companies operating here.
As with any umbrella organization, a fundamental issue is whether PLIA will act merely as an agreeable talking-shop, or whether it will address some of the real challenges facing the industry. There is nothing wrong with the talking-shop route, though nothing much right with it either.
Public relations (PR) can be a significant item on the talking-shop agenda. Heart-warming stories about how benevolent insurance companies allow delayed premium payments for those who have suffered from typhoons can appear in the media. Hallelujah!
But the real challenge is that the Philippines is 111th in the corruption league table and has an insurance sector that matches this fairly lowly position. Insurance is about uberrima fidei – the utmost good faith – and many Filipinos, with good reason, do not trust the industry.
If PLIA is to make a difference, and it can, then it needs to face up to the lack of trust issue. As a lawyer, Mr. Kliesow can do much to change the character of the industry. Lawyers should be the conscience of an insurance company. Instead, at present, they use sophistry and misinformation to browbeat clients who have been wronged by the insurance company. There are no winners here and the industry fails to realize its enormous potential.
If PLIA is to make a difference, it should create an agreed code of practice and implement conflict resolution procedures. The quality of those representing insurance companies varies tremendously. PLIA should recognize that unscrupulous conduct by a few agents can and do much damage to the industry.
President Duterte has recently but unwittingly created a tremendous opportunity for the insurance sector. This is because he has used Social Security System (SSS) funds to give all pensioners an increase of P1,000 per month. This means that those who voluntarily contribute P1,760 per month for their future pensions are finding that their contributions are being used to give a disproportionate advantage to those pensioners who made relatively little contributions.
The insurance industry can now fairly make representations to high-paying SSS members that their monthly contributions can produce better returns in the insurance sector.
A marketing challenge!
Mr. Kliesow mentions that he would like insurance companies to increase their investments in infrastructure and public-private partnership (PPP) projects. PPP was announced with great fanfare in 2010. But results have been disappointing.
I believe that one of the problems is that civil servants are nervous about being out-smarted by the wicked private sector. One example is a PPP project designed to attract an investment of P20.26 billion in improvements to Bacolod-Silay Airport. But after many years, nothing has happened. Unsurprising since I cannot see how the private sector can obtain a reasonable return on the investment under the onerous terms set by the government.
We need a better public-private sector dialogue./PN
