INSURANCE INDUSTRY PERSISTS IN PUSHING THE LIMITS TOWARDS GROWTH
Living up to expectations as a significant player in the financial sector, the insurance industry has once again come to fore, boosting its performance and enabling it to maintain its track of continuous growth, said Insurance Commissioner Dennis Funa.
Based on unaudited interim financial statements as of Sept. 30, 2019 submitted by the Insurance Commission’s regulated entities, the collective assets of the life insurance, non-life insurance and Mutual Benefit Associations (MBA) sectors have reached a record-high of P1.74 trillion, indicating a growth of 12.30 percent compared to that posted in the same quarter of 2018. The industry exhibited a steady average growth rate of 10.57 percent for total assets based on unaudited quarterly reports from 2016 to 2019.
The industry’s growth as of end of third quarter of 2019 in terms of total premiums was a meager 2.77 percent over the same period in 2018, from P218.91 billion to P224.97 billion. This is due to the massive decrease in single premiums for life insurance by 40.1 percent despite increase in premium collection in the other sectors. On the other hand, the increase in total net income during the same period was a remarkable 41.32 percent, from P22.46 billion to P31.74 billion.
All other performance indicators showed growth — total net worth increased by 28.63 percent, total investments by 21.39 percent, and total paid-up capital (guaranty fund in the case of MBAs) by 4.89 percent.
Insurance density and insurance penetration had marginal movements. Insurance density, which is the average spending of individuals on insurance, increased from P2,053.58 to P2,077.30 per individual or by 1.16 percent. However, insurance penetration, which is the premium volume as a share of GDP, slightly dipped from 1.76 percent to 1.69 percent.
On a per sector basis, the life insurance sector continues to comprise the major chunk of the industry’s total assets. With P1.4 trillion as of the third quarter of 2019, it accounts for 80.05 percent of the industry’s assets, followed by the non-life insurance sector’s 14.31 percent and the MBAs’ 5.64 percent.
The life insurance sector’s total premiums decreased slightly by 1.21 percent, resulting from the decrease in take-up of VUL products, particularly the single-pay products, whose sales decreased by 40.10 percent. Still, VUL products dominated the sales for the life insurance sector, with its P124.13 billion comprising 72.15 percent of the P172.05 billion worth of pie.
The total net income of the life insurance sector posted a huge increase of 47.68 percent, from P16.40 billion to P24.22 billion, owing to these factors: increase in net investment income by 22.94 percent, increase in capital gains by a whopping 244.88 percent, and decrease in reserves by 29.40 percent.
On the industry’s net worth, Funa stressed, “It is significant to note the life sector’s 34.89 percent growth in net worth, keeping in mind that the commission’s net worth requirement will increase by end-2019 to P900 million.”
As to non-life insurance sector, commissioner Funa said that the nonlife sector registered growth in all the performance indicators. Its assets increased by 11.81 percent from P222.68 billion to P248.99 billion, while its Investments rose by 32.87 percent, from P84.14 billion to P111.79 billion.
The non-life insurance sector’s total premiums earned, total gross premiums written and net premiums written all increased by 16.95 percent, 11.24 percent and 19.53 percent, respectively. Although the sector has had to pay losses in