After experiencing some decreases in the year of the coronavirus disease 2019 (COVID-19) crisis onset, the local insurance market is seeing growth.

Data from the Insurance Commission (IC) showed that the premium income of insurance companies and mutual benefits associations (MBA) dropped by almost 4% from January to September last year, generating P216.5 billion from P224.97 billion in the same period in 2019. Net income also decreased by 9.85%.

Nonetheless, by the end of 2020, total premiums have registered a 1.18% increase from that of 2019. Though net income still dropped by 8.60%.

Premiums then surged in the first quarter of the present year. Gross premiums jumped 27.81% to P99.89 billion from P78.15 billion a year earlier. 

In the same period, the life insurance sector reported a total premium income of P83.2 billion, increasing 36.62% from the previous year. MBAs, meanwhile, saw an 11.53% growth with its P3.18 billion of total premiums. But non-life insurance companies earned 10.33% lessened premiums and have a 7.95% decrease in gross premiums written as well.

The total net income grew by 45.64% in the first quarter, with life and non-life increasing their total net income to 38.16% and 626.2%, respectively.

Insurance penetration, which is the industry’s contribution to the economy, is also up from 1.76% to 2.3% in the first quarter.

According to IC Commissioner Dennis Funa, this growth in the insurance market can be attributed to growing number of Filipinos enrolling in insurance policies given the crisis situation. However, at the same time, the economy registered a decline.

“The data is a bit warped nowadays. It does not reflect a normal situation. The reason is that the [gross domestic product] has gone down from the previous years. So, the denominator does not reflect a continuity of growth,” Mr. Funa was quoted as explaining in a report last month.

“[Clientele] has also been increasing, but it would not be at 2.3 [percent] if under normal times the growth is still real,” he added.

Mr. Funa also credited IC’s push to shift products to digital and the policy to consider insurance providers as frontline workers for the first-quarter growth in the insurance sector.

As the economy reopened and heightened the demand for life and non-life insurance policies, premiums ballooned more than 37% to P187 billion in the second quarter of 2021.

Based on a report by The Philippine Star earlier this week, IC said that insurers posted a combined profit of P24.63 billion in the said period, over a 29% increase from P19.03 billion a year ago.

The industry has also increased its investments, now having P1.75 trillion, which was a 12% increase from P1.56 trillion.

Life insurers have sold premiums that swelled almost 44% to P155.17 billion on on increases in single premiums, first year, and renewal premiums for traditional policies. Net premiums written was up by 13% to P25.51 billion for the non-life, which is attributed to the hikes in automotive policies, among others. While MBAs grew their premium income by 19% to P6.46 billion.

“The growth of the life and non-life insurers’ and MBAs’ aggregate premiums and contributions earned and their aggregate net income in the second quarter of 2021 are indicative of economic recovery amid the COVID-19 pandemic,” Mr. Funa was quoted as saying in the report.

Furthermore, insurers have expanded the released amount of benefits to P69.94 billion from P44.26 billion or almost 47%. For the IC Commissioner, this year-on-year increase in benefits paid during the quarter showed the responsiveness of life and non-life insurers as well as the MBAs to the people amid the challenges of the pandemic.

During the first half of the year, according to another report, IC shared that the insurance industry has paid P4.35 billion in COVID-19 insurance claims, about half of which, P2.06 billion, was given by the health maintenance organizations (HMOs), while life insurers provided P1.98 billion. MBAs accounted for P191.7 million, while P119.1 million from non-life insurers.

According to Mr. Funa, the insurance industry has issued P8.25 billion of COVID-19 claims since the pandemic started in the first quarter of the previous year. P3.98 billion came from HMOs, while life insurers released P3.44 billion. MBAs followed with P546.6 million, and the non-life paid P279.3 million.

Global outlook

The insurance industry, in the global perspective, likewise saw paradigm shifts with the heightened risk awareness among consumers and businesses. Digitalization has also transformed sales and services for both life and non-life insurers. These are drivers of insurance market growth, according to the Swiss Re Institute.

In its publication sigma 3/2021 — World insurance: the recovery gains pace, the Swiss Re Institute shared that global health and protection-type insurance premiums gained respective increases by 1.9% and 1.7% in 2020. Meanwhile, it expected a strong recovery in global life insurance premiums to above-trend growth of 3.8% this year and 4% in 2022, seeing a benefit as the pandemic triggered risk awareness.

Swiss Re Institute observed that the global insurance industry is resilient as it weathered the pandemic crisis. It reported that premiums dipped milder compared to the situation during the Global Financial Crisis of 2008-2009. 

Expecting a faster recovery for life and non-life insurance, it presumed an above-trend growth of 3.3% and 3.9% for 2021 and 2022, respectively, taking the total global direct premiums written this year to 10% higher than the pre-crisis levels in 2019.

Drawbacks to these forecasts might include protracted recovery due to soft demand around the world; ineffective stimulus as debt burdens constrain policy; the likelihood of COVID-19 variants emerging; and slow recovery in the labor market. — Chelsey Keith P. Ignacio

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