It was in 1898 that life insurance was introduced in the Philippines, when Sun Life Assurance of Canada began doing business. The first domestic non-life insurance company was the Yek Tong Lin Fire & Marine Insurance Company (Now Philippine First Insurance Company) established in June 8,1906. In 1910, the first domestic life insurance company, the Insular Life Assurance Company, Ltd was organized.

The insurance business in the Philippines has made great strides, and credit could be given to the various organizations that have dedicated time, effort and resources, to uplift the standards of the insurance industry. These associations include the Insurance and Surety Association of the Philippines )ISAP), the Philippine Life Insurance Association (PLIA), the Philippine Life Insurance Rating Association (PIRA) and the Insurance Institute of Asia and the Pacific.

However, in the Asia-Pacific insurance outlook 2006-2007 report, Standard and Poor's Rating services has given the Philippine insurance sector a negative rating, the lowest in the region due to the weak capitalization and constant strain on profitability caused by the heavy tax burden on the sector. In terms of economic and industry risk, the life insurance market is ranked high in both categories. The non-life insurance sector is also rated negative by S&P.

Insurance Business Environment Rating (IBER) makes it easier for the insurance sector business environment in a particular country to be compared with the business environment for any other BMI-monitored industry in that country. The IBER also allows an objective and meaningful comparison of the insurance sector business environment between countries. The Philippines IBER is 51.4. Still a Negative rating.


The Philippine insurance market is small. It is  estimated that a little over 20 percent of the country’s population have one type of life or personal accident insurance coverage.And yet, the government still lost P800 million in potential collection of premium tax last year due to the delinquency of certain insurance firms in paying their taxes, according to the Department of Finance. Based on DOF estimates, premium tax collection should have reached P2.6 billion last year based on premiums remitted to insurance firms. However, the government collected only P1.9 billion.

Hence, new taxes was imposed upon the insurance industry.Under the new circular, the gross premium receipts of nonlife insurers are subject to the 12-percent value-added tax, and the compulsory third-party liability insurance for motor vehicles must pay P15 in documentary-stamp tax. The provision would have also covered the documentary-stamp t ax for group personal-accident insurance and marine-cargo insurance.Traditional life-insurance policy holders that pay premium for the protection they get would have also been subjected to a 5-percent premium tax, plus 50 centavos for every P200 worth of premium and the 35-percent corporate income tax.

The Philippine Life Insurance Association, the Philippine Insurers and Reinsurers Association and other organizations earlier protested the imposition of new taxes on an industry they claim is one of the most heavily taxed in the country. Life insurance companies are against the imposition of new taxes as it would hurt the industry and the insuring public. New taxes will only hurt the already-burdened insurance industry, and it will also have a negative impact on Filipinos without insurance.

Perhaps the most significant obstacle the industry faces is the heavy tax burden put on premiums, as it erodes corporate profit margins and discourages new customers.Compounding this difficulty was the increase in EVAT and taxes from local government such as Manila and Makati. Taxes now go as high as P.28 centavos for every one peso of premium in the case of fire insurance alone.

The government must take into account the costs that are beyond the reach of the countrymen. In fact, the market is incredibly large.the low-penetration rates indicate that there is a great room for growth. and it is just a matter of affordability.an improvements to the tax regime.