‘Opportunities abound for PH insurance sector’

MOODY’S REPORT:

GLOBAL credit- rating agency Moody’s Investors Service said the Philippine insurance industry had plenty of opportunities for growth, but cautioned that challenges remain.

In its “Sectors In-depth” report on Thursday night, Moody’s said the sector would “be underpinned by the country’s high catastrophic exposure, higher capital and reserving requirement, and industry consolidation.”

It noted in particular the country’s proposed solution to manage natural catastrophe exposure. This includes a P10-billion catastropherisk insurance program launched by the Government Service Insurance System and the World Bank to cover losses for damage wreaked by typhoons and earthquakes.

The agency said the Insurance Commission’s higher capital requirement under the Risk-based Capital Framework “will improve the industry’s resilience and capacity to support future premium growth.”

Under the amended Insurance Code, existing insurance companies were required to have a minimum net worth of P550 million from the previous P250 million in 2016.

The capitalization requirement will again increase to P900 million in 2019 and P1.3 billion by 2022.

Moody’s also said the Duterte administration’s “Build, Build, Build” infrastructure program would also drive non-life premium growth.

However, it believes that regulators’ promotion of market consolidation will reduce competition in the industry.

“Foreign firms dominate the