Life insurance industry’s premium income rises to ₧247.7B in 2020
DESPITE the Covid-19 pandemic, the life insurance industry earned more premium income last year at P247.72 billion, up by 5.9 percent from P233.92 billion in the previous year.
Based on data submitted by 31 life insurance companies, the Insurance Commission on Tuesday reported that variable life insurance premiums last year reached P183.24 billion, growing by 7.7 percent from P170.13 billion in 2019. This, as single premiums and renewal premiums rose by 19.72 percent and 13.58 percent, respectively.
On the other hand, premiums earned by traditional life policies also hit P64.48 billion in 2020, inching up by 1.09 percent from P63.78 billion in 2019. The increase was due to the 13.72-percent increase in renewal premiums year-on-year.
In the view of Insurance Commissioner Dennis B. Funa, the mobility restrictions amid the Covid-19 pandemic helped the middle-class sector save money.
“It has been observed by the financial sector leaders that generally the savings of the middleclass sector grew due to restraints in consumer spending because of the pandemic,” Funa said.
However, Funa said the imposition of lockdowns to curb the spread of Covid-19 also took its toll on the aggregate benefits paid by the industry last year.
The industry only paid P69.36 billion in benefits last year, posting a double-digit drop of 10.06 percent from P77.11 billion in 2019.
“It is highly likely that this contraction is due to the various difficulties encountered in the processing, filing, and pay-out of claims as an effect of certain community quarantine restrictions imposed by the national government to curb the spread of Covid-19,” Funa said.
Likewise, the life insurance industry’s total New Business Annual Premium Equivalent (NBAPE) also dropped to P46.16 billion, plunging by 19.8 percent from P57.56 billion in 2019. Funa said this may be attributed to the restrictions on face-to-face selling of insurance products due to community quarantine measures.
“The industry grappled with the on-and-off quarantine and lockdown measures, and the fact that we were unable to continuously offer insurance agents’ examinations greatly hampered the production of insurance companies,” Funa said.
A life insurer’s NBAPE is computed by obtaining the sum of the value of first year premiums from products newly sold in a specific year (or the initial annualized premium) and 10 percent of single premiums written.
It is an international standard that the Insurance Commission has adopted to more accurately measure the life insurance industry’s sales performance.
Meanwhile, the industry’s paid-up capital rose to P25.28 billion during the pandemic year, climbing by 7.66 percent from the previous year’s P23.48 billion.
The life insurance sector’s assets also hit P1.53 trillion last year, jumping by 7.78 percent from P1.42 trillion in 2019.
This may be attributed to the growth in the industry’s total investments, both in traditional and segregated fund, by 6.72 percent year-on-year, from P1.39 trillion for the year 2019 to P1.48 trillion for the year 2020, the Insurance Commission said.
For this year, Funa expressed optimism for a more positive turnout for the negative indicators.
“The Insurance Commission is hopeful that the negative indicators will improve by the year 2021, especially with the rollout of the vaccines towards the third and fourth quarters of the year. It will be interesting to see the impact of the shift from face-to-face selling to remote selling via videoconferencing technologies in the sale of insurance products, which was already institutionalized in the Circular Letters issued by the Insurance Commission,” he said.
“Also, we also hope to see the impact of the increased awareness of the importance of having life insurance as a way to provide security and peace of mind amid the threats of the Covid-19 pandemic to the lives and health of the Filipino people,” he added.