The Philippine insurance industry remains upbeat in recent years, going hand in hand with the country’s evolving economy. While all sectors of the industry — life insurance, non-life insurance and mutual benefits organizations (MBAs) — continue to register a positive growth, common growth bottlenecks remain.

The Insurance Commission reported in December last year that the industry’s total premiums as of the end of third quarter of 2018 rose by 18% to P218.91 billion from the P185.51 billion recorded in the same period of 2017.

The life insurance sector stays as the industry’s growth driver, booking P174.15 billion in total premiums which accounted for 79.55% of the premiums collected by the industry. The sector, in particular, collected P130.14 billion in premiums from variable life insurance products and P44.02 billion from traditional life insurance products.

Insurance Commissioner Dennis B. Funa said a significant increase in all types of variable life insurance products were observed, with first year, single and renewal premiums posting double-digit growth of 20.72%, 21.27% and 29.52%, respectively.

The net premiums written by the non-life insurance sector, at the same time, increased by 7.34% to P36.83 billion as of end September 2018 from P34.31 billion in the same period the prior year.

Consistent with the trend in the past reporting periods, the motor car insurance business comprised more than half of the total net premiums written with 51.39%. This is followed by fire insurance business with 13% share and accident insurance business with 9.87%.

Meanwhile, the contributions or premiums posted by MBAs also increased by 21.2% to P7.93 billion from P6.54 billion.

Overall, the total assets of the insurance industry in the first nine months of 2018 further increased to P1.55 trillion from the P1.54 trillion tallied in the same period in the previous year. Insurance density, which is the ratio of premiums to the total population, rose by 16.12% to P2,053.58 from P1,768.49; while insurance penetration, the ratio of premiums to the country’s gross domestic product, grew from 1.64% to 1.76%.

The latest ranking of life insurance companies in the country released by the Insurance Commission last November showed that Sun Life of Canada (Philippines), lnc. has retained its market leadership in terms of premium income collected for 2017. The firm collected a total premium of P32.11 billion.

Philippine AXA Life lnsurance Corp. ranked second with P26.18 billion, followed by BPI-Philam Life Assurance Corp., Inc. with P20.33 billion.

For the non-life insurance companies, Prudential Guarantee & Assurance, Inc. emerged on top in terms of net premiums written for the year 2017, after recording P4.81 billion premium income. It is followed by Charter Ping An with a premium income of P4.08 billion.

Malayan lnsurance Company, lnc., who took the top spot in 2016, ranked third with P4.07 billion in net premiums. In terms of recorded total assets, the firm took the top spot in 2017 with P38.81 billion, climbing from second place in the previous year.

Meanwhile, the growing statistics of individuals covered by microinsurance, together with the sector’s improving premium production, also mirrors how the local insurance industry is steadily expanding.

Earlier this month, the Insurance Commission reported that the number of individuals covered by some form of microinsurance protection as of end of 2018 increased by 18.77% to 38.89 million from 2017’s 32.74 million.

The MBA sector covered a total of 22.75 million individuals, up by 17.67% from 19.33 million. The life insurance sector posted the highest increase in the number of lives covered, recording a 30.23% growth to 11.85 million from 9.1 million.

The non-life insurance sector, on the other hand, saw a slight decrease of 0.54% in individuals covered with only 4.29 million, compared to 4.31 million in 2017.

In terms of premiums produced last year, the Insurance Commission said the microinsurance sector’s total premium production rose by 14.45% year-on-year to P8.14 billion from P7.11 billion.

The MBA sector continued to be the frontrunner in terms of production in 2018, recording contributions amounted to P4.56 billion or an increase of 16.8% from the P3.9 billion recorded the previous year.

Meanwhile, the life insurance sector produced microinsurance premiums worth P2.58 billion, growing 6.94% from 2017’s P2.42 billion. The non-life sector, on the other hand, booked P998.97 million, a 25.78% increase from P794.19 million.

“Based on the statistical data as of end 2018, we saw that the non-life and life insurance sectors showed significant increases in terms of premium production and number of lives covered. This only proves that microinsurance in our country continues to grow and is an effective and affordable financial product for the protection of the properties and lives of our countrymen,” Mr. Funa was quoted as saying in a statement. 

Global credit rating agency Moody’s Investors Service said that strong socioeconomic fundamentals — urbanization, a growing middle class, low insurance penetration, and the lack of a sufficiently funded welfare system — will continue to support the growth of the insurance sector in Southeast Asia, including the Philippines.

“However, the pace and quality of such growth will vary to reflect differences in market maturity, financial depth, demographics and policies, and the insurance industry in these countries are finding different ways to overcome common growth bottlenecks,” Moody’s Assistant Vice-President and Analyst Frank Yuen was quoted as saying in a statement.

The bottlenecks include difficulties in expanding and enhancing distribution capabilities, low protection content in mainstream products, shallow bond markets that limit investment options, and an increasing need to improve the capacity of industries to withstand shocks and support growth through tightening risk-based capital regimes. — Mark Louis F. Ferrolino