Insurance chief upbeat on industry’s growth this year

The Insurance Commission remains upbeat that the local insurance industry would continue its growth this year due to strong consumer spending and robust economic expansion.

Insurance Commissioner Dennis B. Funa added that the heightened confidence in the Duterte administration would also help boost the insurance industry.

“This would benefit the different industries, translate into a considerable amount of potential to the insurance industry and would address the challenges brought about by the ASEAN integration,” Funa said in a statement.

Based on IC data, insurance density — representing the average amount spent on insurance by each individual in the country — grew by 84.1 percent to R2,286 in 2015 from R1,241.5 in 2011.

During the period, the insurance penetration — ratio of insurance premium to gross domestic product (GDP) or the contribution of the insurance sector to the economy — also improved from 1.02 percent to 1.75 percent.

Meanwhile, the market penetration rate — ratio of individuals with life insurance coverage to population — increased from 18.29 percent of the population to 41.27 percent in 2015.

But despite the steady increase in insurance density and penetration rate, the figure is still considered low compared to other ASEAN countries.

In order to address these challenges, Funa said that the IC will implement regulatory reforms and enhancements to address these problems.

Funa cited the recent mandatory increase in the minimum capitalization requirement of insurance companies from R250 million to R550 million.

One of the important drivers in the growth of the insurance industry is the higher capitalization requirements of insurance companies leading to increase in the public’s confidence in insurance.