The government needs to slash “the onerous tax” on non-life and agriculture insurance premium to attract investments in the rural farm activity through financing.
In an online forum hosted by the Southeast Asian Regional Center for Graduate Study & Research in Agriculture (SEARCA), Agri-finance expert Dr. Jaime Aristotle Alip said cutting around 27 percent of the tax on insurance premium will significantly increase private insurance offerings.
Alip, who is the chairman emeritus of CARD MRI, said tax on non-life insurance, including those for crop or agriculture insurance, should only be at a minimal 2 percent.
Other non-life insurance with high taxes he cites is disaster insurance and health insurance.
“If you want private sector participation, you must level the playing field. You should lower down non-life premium tax (including tax for crop or agriculture insurance). I think there will be many private sector players (given this),” Alip said.
“It will be the law of numbers and the law of efficiency (that will work). The gap must be addressed. Lawmakers should make the non-life insurance affordable.”
Alip noted that once there is insurance or a guarantee program for farmers’ loans, banks will automatically lend even to small farmers.
He added that insurance or a loan guarantee is critically important in financing the marginalized farmers, in helping them get out of poverty.
As of January 2021, CARD MRI alone served 7.43 million clients and insured 27.219 million individuals.
It has an outstanding loan of P30.77 billion and savings of P28 billion — accounting for 20 percent of the entire microfinance industry in the country.