Only 13% of adults in Metro Manila, Luzon, the Visayas and Mindanao have risk protection cover, according to a paper released by the Philippine Institute for Development Studies (PIDS).
In a discussion paper, titled “What Determines Financial Inclusion in the Philippines? Evidence from a National Baseline Survey,” PIDS President Gilberto M Llanto and Research Specialist Maureen Anne D Rosellon said many Filipinos nationwide shy away from formal financial services, such as insurance, reported Business Mirror.
“In all four geographic areas, only about 13% of adults have availed themselves of insurance products and services. The low take-up could be due to nonavailability of insurance products, lack of information or lack of suitable insurance products, and other factors,” the research pair said.
“The situation in the insurance sector merits a serious study because insurance equips households with ability to cope with exogenous shocks, which could sometimes be catastrophic, and to develop resilience to such shocks,” they added.
The researchers said areas outside of Metro Manila or the National Capital Region usually do not have banks and other financial services firms. This poses concern about access, especially for low-income households. The absence of formal financial services in these areas forces households to resort to informal sources of financing or credit, such as savings at home, forming informal group savings or borrowing funds from moneylenders. These also affect household’s opportunity to access insurance services.
“The situation in the insurance sector merits a serious study because insurance equips households with ability to cope with exogenous shocks, which could sometimes be catastrophic, and to develop resilience to such shocks,” the authors said.