MANILA, Philippines - The country’s life insurance industry is seen to grow by eight to 10 percent in terms of total premiums this year.
Last year, premium payments shrank by 33.4 percent, the biggest decline ever experienced by the country’s life insurance industry, as major players suffered major reversals.
The top 11 life insurers absorbed a 34.1-percent drop in premiums, with the top five incurring an average decline of 30.6 percent.
According to Philippine Life Insurance Association (PLIA) president Victor P. Quisumbing, a number of factors worked against the life insurance industry.
Foremost was the global credit crisis that played a major role in the decline in premiums. This was followed by the over-reliance on the investment-laced variable products, and single pay premiums.
“It’s time to return to the basics,” Quisumbing, who is president and chief executive officer of the Great Pacific Life Assurance Corp. (Grepalife), said.
That means putting emphasis anew on the protection character over the investment features of life insurance products.
Traditional life products like term and whole life are likely to be popular anew.
Insurers have started selling policies the traditional way while continuing to practice bancassurance, or selling insurance policies within bank branches.
PLIA claims that a mere 14 percent of the country’s population are policy holders of life insurance policies, one of the lowest in the region.
Of the 14 percent, more than half are insured through the government pension funds, or the Social Security System (SSS) and the Government Service Insurance System (GSIS).
Quisumbing said 2009 will be a challenging year for insurers with the interest rates dropping to one of its lowest levels. Under the law, insurers must invest a sizeable portion of their investments in fixed income instruments that rely heavily on prevailing interest rates.
The industry was forced to re-price upwards prices of policies in the past two years.
This year, insurers had been forced to change the earnings commission structure of its sales agency force to remain competitive. And that is an area of extreme concern as the insurance industry relies heavily on a productive agency force, followed by a distant bancassurance and direct marketing.
Quisumbing said PLIA is supporting pieces of proposed legislation that will abolish the five-percent premium tax and the documentary stamp tax (DST).