A bright and robust sector

The Philippine insurance industry remains bright and robust, exhibiting positive growth in recent years despite some internal and external challenges. In fact, in 2018, the local insurance sector marked another banner year after posting new record highs in terms of premium, assets, net worth, and net income. Preliminary data based on unaudited reports submitted by all industry players to the Insurance Commission (IC) showed that the industry’s assets reached an all-time high of P1.58 trillion as of end of 2018, up 1.28% from the P1.56 trillion recorded as of end 2017.

The industry also posted the highest amount of premiums collected for the recent years. The industry’s total premium income grew 11.67% to P290.15 billion in 2018 from P259.82 billion posted a year ago.

In terms of net worth, the local insurance industry likewise posted a record-high net worth amounting to P337.37 billion in 2018, an increase of P17.07 billion from P320.3 billion a year ago. The industry’s total net income also rose to a record high of P37.43 billion from P36.39 billion, which translates to a 3% growth.

For the first half of 2019, however, the industry experienced a slight slowdown in terms of premium income, based on the unaudited quarterly reports submitted by life and non-life insurance firms and mutual benefit associations (MBA) to IC. The latest report released by the regulator on Oct. 10 showed that the industry’s overall premium income dropped 2.64% to P141.91 billion in the first six months of the year from P145.76 billion posted in the same period last year.

“The decrease in the total premium of the insurance industry can be attributed to the decrease in the uptake of single premium variable products due to global market uncertainty and economic slowdown,” Insurance Commissioner Dennis B. Funa was quoted as saying in a statement.

“Despite the year-on-year increase in the first year and renewal premiums in variable life products of 11.67% and 32.04%, respectively, the decline in the premium from the sale of variable life insurance products was caused by the significant decrease of single premium of 52.5% from P43.24 billion last year to P20.54 billion this year,” he added.

Meanwhile, premiums collected from traditional life insurance products increased by 12.55% to P31.17 billion as of end of second quarter of this year from P27.69 billion during the same period in 2018.

“A remarkable increase of 94.97% should also be noted in single premium policies of traditional life insurance from P1.1 billion in Q2 2018 to P2.2 billion of the same quarter in 2019,” Mr. Funa said.

The non-life insurance sector’s net premiums, on the other hand, grew by 12.98% year-on-year to P27.61 billion from P24.44 billion in the previous year. Consistent with the trend in the past reporting periods, the motor car insurance business contributed majority of the total net premiums at 49.47%.

Similarly, the MBA sector’s premium income grew 13.54% to P5.88 billion as of end of second quarter this year from P5.18 billion posted in the same period a year ago.

Overall, the total assets of the local insurance industry in the first six months of 2019 rose by 11.79% to P1.72 trillion from P1.54 trillion as of end-June last year.

“As of end of the first half of this year, the three sectors of the insurance industry registered positive growth in terms of assets. A significant portion of the industry’s assets or 88.37% (P1.52 trillion) were held in income generating investment,” Mr. Funa said.

Meanwhile, early this year, IC also released the ranking of top insurance companies in the country for 2018 in terms of key insurance statistics.

Among the life insurance companies in the country, Sun Life of Canada (Philippines), Inc. emerged on top and has retained its market leadership in terms of premium income collected at P37.39 billion. In terms of new business annual premium equivalent, Sun Life also topped the other life insurance companies with P8.22 billion.

Based on net income, on the other hand, Philippine American Life & General lnsurance Co., (Philam Life) took the top spot with P9.8 billion. It also topped the sector in terms of assets and net worth, amounting to P246.75 billion and P78.87, respectively.

For the ranking of non-life insurance companies in terms of net premiums written for 2018, Prudential Guarantee & Assurance, lnc. remained on top after recording the highest premium income of P5.18 billion.

In terms of gross premiums written and assets, Malayan Insurance Company, lnc., ranked first with P10.16 billion and P34.28 billion, respectively.

Based on net worth, Pioneer lnsurance & Surety Corporation has retained its market leadership with P15.39 billion. The BPI/MS lnsurance Corporation, on the other hand, recorded the highest net income with P453.83 million.

According to IC, existing insurance companies are required to increase their respective net worth to P900 million by end of 2019 from the existing minimum of P550 million. This is the penultimate mandatory increase in minimum net worth requirement as required under the lnsurance Code, as amended by Republic Act No. 10607. By end of 2022, firms are required to have a net worth of at least P1.3 billion. — Mark Louis F. Ferrolino