PLIA confident strong growth sustainable

The Philippine Life Insurance Association, Inc. (PLIA) said that the industry could sustain its strong double-digit expansion seen last year on the back of improving financial literacy of Filipinos along with the country’s stable macroeconomy.

Olaf Kliesow, PLIA president said the economy, as measured by the country’s Gross Domestic Product (GDP), may grow at above seven percent this year that should support the expansion of the local life insurance industry’s premium income.

In 2017, life insurers saw premiums rise by 10.7 percent to R202.341 billion from the R182.794 billion logged in the previous year.

“I think if you look at the macroeconomics, it’s just very sound in the Philippines. I think it will make it a good year for the industry,” said Kliesow, who is also the chief executive officer at Allianz PNB Life Insurance, Inc.

The PLIA official also cited the country’s improving unemployment rate and manageable inflation as other reasons for the overall optimism about the life insurance business.

“Yes inflation is going up slightly but that’s related to the TRAIN [Tax Reform for Acceleration and Inclusion] law that is not generally expected to be further increasing very much,” Klieson explained.

As about the risks to higher growth, Klison said are natural catastrophes, geopolitics and “maybe” protectionism that may lead to trade friction. “I think the industry is developing very well, the 2017 figures even though there is no breakdown yet, it seems that 2017 has been a strong year for the industry overall,” Klieson said.

“I think there is a big opportunity in the Philippines for further supporting customer needs, about half of the population that is still not familiar with insurance. The insurance penetration is 1.3 percent so there is still room to grow,” he added.

Last week, Insurance Commissioner Dennis Funa said that the country’s total insurance industry saw premium income grow by 11.9 last year with all sectors recording expansions, regulators reported on Friday.

Data from the Insurance Commission showed total premium income reached R259.64 billion in 2017, up from R231.88 billion in 2016. “We had a very good year in 2017. Very healthy insurance industry,” Funa said.

“Eventually, it is the government that will benefit because much of the assets of the insurance industry are invested in government bonds and of course a portion of that are also invested in equities,” he added.

The insurance industry’s total assets expanded by 17.8 percent to R1.54 trillion from R1.31 trillion last year, Funa reported.

Total net worth stood R315.43 billion in 2017, up by 16.3 percent from R271.18 billion.

Considering the significant increases in the paid-up capital of several companies, the insurance industry posted a 10.4 percent increase in total paid-up capital to 50.75 billion last year.

Funa said that strong industry growth would continue this year given a strong equities market and the government’s infrastructure program.