Home Banking & Finance Insurance industry’s share in PHL economy likely at record in 2021

Insurance industry’s share in PHL economy likely at record in 2021

THE insurance sector’s contribution to gross domestic product is expected to have hit a record in 2021. — BW FILE PHOTO

THE INSURANCE industry’s contribution to gross domestic product (GDP) last year likely surpassed record figures after it inched up in the four years to 2021 as more of the population seek insurance products, the Department of Finance (DoF) said.

The industry’s contribution to GDP increased to 2.03% by the third quarter of last year from 1.64% in 2017, the DoF said in a press release on Wednesday.

“We will see that the highest ever penetration rate was achieved at the end of 2020, and we see bright figures for 2021. I believe that the highest ever penetration rate will even be surpassed in 2021,” Insurance Commissioner Dennis B. Funa said in a report to the Finance department.

The contribution to GDP by the end of 2021 would have to surpass the 1.71% end-2020 figure to exceed the record. The most recent insurance industry data available so far is the end-September 2021 period.

The industry’s net income, based on Insurance Commission data, grew to P37.5 billion as of the third quarter of 2021, up 34.6% from P27.86 billion in the same period in 2017.

Gross premiums as of end-September 2021 reached P278.7 billion, up 50% from P185.5 billion in the same period in 2017.

Mr. Funa said the amount spent by each Filipino for insurance — known as insurance density — reached P2,528 as of the third quarter of last year, higher than the P1,768 in the same period in 2017.

“For 2021, I see a record insurance density figure, especially with people becoming more conscious of the benefits of insurance, especially after the peak of the COVID pandemic in 2020,” he said.

He reported that the industry’s gross premiums and net income slowed down in 2020 as economic activity fell during the pandemic.

“This is due primarily to the life insurance sector, which was impacted more by the COVID pandemic,” he said. “However, in spite of all these, our third-quarter figures for last year show a strong rebound.”

Gross premiums as of end-2020 inched up 1.18% to P308.3 billion year on year, while net income dropped 8.6% to P41.2 billion.

By the end of the third quarter of 2021, gross premiums increased 28.7% to P278.66 billion compared with the same period a year earlier, while net income grew 31% to P37.5 billion.

“This pandemic has just brought to people’s attention the risks in life and the realization that livelihoods can be wiped out in a flash,” Finance Secretary Carlos G. Dominguez III said. — Jenina P. Ibañez