Beyond protection: How insurance powers economic growth
For many Filipinos, insurance is seen primarily as protection for difficult moments: an illness, an accident, the loss of a breadwinner or damage caused by a natural disaster.
Insurance is often viewed by Filipinos primarily as protection against life's uncertainties, such as illness, accidents, loss of income and natural disasters. However, research indicates that the value of insurance extends far beyond individual policyholders, playing a crucial role in driving economic growth across six ASEAN markets, including the Philippines.
If life insurance coverage were to increase by 50 percent by 2050, the country's GDP per capita and total GDP could potentially rise by up to 5.1 percent. Similarly, a 50 percent increase in non-life insurance, including health insurance, could potentially boost GDP per capita and total GDP by up to 2.9 percent. These projections, while based on modeling rather than predictions, highlight the significant contribution of broader insurance coverage to a stronger and more resilient economy.
In the Philippines, where families are particularly vulnerable to financial risks from various sources, insurance serves as a vital safety net. The cost of healthcare and recovery from climate-related disasters can erode years of household savings. In 2025, out-of-pocket health spending accounted for 41.2 percent of total health expenditure, potentially diverting resources from savings, education and investment.
Climate-related damage, such as the damage to 73,000 houses and the agricultural and infrastructure losses from recent typhoons and the southwest monsoon, underscores the need for stronger financial protection. The Philippine government's recent State of the Nation Address emphasized the importance of insurance coverage, aligning with the Philippine Development Plan 2023–2028.
By helping Filipinos manage risks throughout their lives, economic shocks, health emergencies and disasters, insurance can complement public social protection programs, providing additional financial security during critical times. Insurance coverage does more than protect individuals; it supports economic productivity and growth.
Health insurance, for example, enables individuals to access necessary medical care without facing significant out-of-pocket expenses, promoting sustained workforce participation and productivity. By ensuring families are financially secure, insurance allows households to focus on long-term priorities like education, skills development and other investments that enhance human capital.
Life insurance also fosters long-term savings and capital formation, enabling insurers to direct funds into productive investments that support business expansion, infrastructure development and overall economic growth. As the Philippines takes on the role of ASEAN Chairmanship in 2026, strengthening financial protection should be a key focus for sustainable and inclusive development.
Currently, insurance penetration across the ASEAN region averages around three percent of GDP, significantly lower than the global average of 6.7 percent. By increasing insurance coverage and fostering regional collaboration, governments, regulators and insurers can enhance financial literacy, encourage innovation, strengthen public-private partnerships and broaden access to protection.
Insurance should not merely be seen as a safety net. When properly understood and more widely accessible, it can serve as a strategic tool for building a more resilient, productive and prosperous Philippines and ASEAN region.
Written by urgent.news from Philippine Star Business's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
