Total premiums in the Philippine insurance industry reached PHP259.6 billion (US$5 billion) in 2017, representing growth of 11.9%, from PHP231.8 billion in 2016, according to the Insurance Commission citing unaudited quarterly statistics submitted by life, nonlife and mutual benefit associations (MBAs).
The industry posted total assets estimated at PHP1.55 trillion at the end of last year, which was 18% higher than at end-2016, reported Philippine Star quoting the regulator's data.
“The three sectors—life, non-life and MBAs—all posted positive growth in the four parameters of assets, premiums earned, net worth and paid-up capital or guaranty funds,” Insurance Commissioner Dennis Funa said.
The life insurance sector reported premium income of PHP202.34 billion in 2017, up 10.7% from the previous year. Total assets of life insurance firms amounted to PHP1.26 trillion as of end-2017, while net worth and paid-up capital reached PHP202.9 billion and PHP20.6 billion, respectively.
“Equities is a big factor. If you focus on the life sector, a significant portion of that is derived from variable life insurance that is really the driving force of the sales of life insurance today. It’s the investment product that the insuring public is looking at,” Mr Funa said.
The non-life insurance sector accounted for PHP48.6 billion of the industry’s total premium income, an increase of 16.7% from 2016. The sector’s total assets stood at PHP207.33 billion as of end-December, with total net worth and paid up capital reaching PHP81.98 billion and PHP29.28 billion, respectively.
“I think (this is driven by) the overall performance of the economy. One big growth sector is car insurance. Motor vehicle business continues to go up,” Mr Funa said.
Lastly, the MBAs, the biggest players in the microinsurance business, reported a 16.89% increase in premiums collected in 2017 to PHP8.74 billion. Total assets of MBAs amounted to PHP77.45 billion, while total fund balances rose to PHP30.55 billion. The sector’s guaranty funds reached PHP908 million.
Going forward, Mr Funa said the Insurance Commission would continue seeking reforms to improve its services and help sustain the financial strength of the industry.
However, the insurance chief cited some challenges, including the implementation of the Tax Reform for Acceleration and Inclusion Act.
“I understand that the lower and simplified tax on estates will likely affect the business of insurance, particularly life insurance whose proceeds were previously commonly used to pay off estate taxes. With the new lower tax scheme, resorting to this course may no longer be necessary,” he said.
Despite these challenges, Mr Funa said the industry should not be discouraged as life insurance remains a viable and beneficial product.