Market volatility to affect insurance premiums--IC

MANILA--Challenges in the domestic financial markets as a result of external developments are seen to hurt the insurance industry’s performance this year.

Insurance Commissioner Emmanuel Dooc said he is not that optimistic on the 25 percent annual growth of premiums this year, given the weakness of the Philippine peso and the Philippine Stock Exchange index (PSEi).

He earlier projected premiums to reach about P280 billion to P300 billion in 2016.

However, given the volatility in the financial markets due to developments in advanced economies, such as concerns on when the next hike in the US Federal Reserve rate will happen and the path of oil prices, the Insurance commissioner said he is crossing his fingers for developments to become positive.

In the first half of this year, insurance premiums were down by 9.12 percent to P105.52 billion.

Last year, insurance premiums totaled P233 billion, up 18.15 percent year-on-year.

Dooc said he is hopeful that the situation would improve in the third quarter of the year for premiums to post modest growth.

He explained that the bulk of the premiums is generated by variable life insurance products, which are dependent on domestic output, the peso and the equities market, among others.

He said it is difficult to encourage people to invest in the equities market if yields are not that attractive.

“But I am hopeful because as explained by economic managers, the volatilities are driven by external forces like the strengthening of the US economy and upgrade of interest rates,” he said.

“Hopefully, we will recover in the remaining months of the year. If we post positive growth, that’s a very good starting point,” he said referring to next year’s situation.