Phl life insurance premiums seen to grow 9.9% in 2013

MANILA, Philippines - The Swiss Re Group is forecasting that the Philippine life insurance will register a real premium growth of 9.9 percent this year, coming from an expected 19.3 percent in 2012.

It likewise expects that the country’s non-life insurers will register real premium growth of 10.1 percent in 2012 and by 7.6 percent this year.

Swiss Re is one of the global re-insurance leaders, including insurance and other insurance-based forms of risk transfer.

Emerging Asia life insurers are forecast “to contribute 10 percent of global life insurance premiums and eight percent of non-life insurance premiums in 2013, compared with four percent and two percent, respectively, a decade ago.”

After registering a negative 10.6-percent contraction in 2011, it is anticipated to contract by a mere 0.1 percent in 2012 but a positive 9.8 percent in 2013.

Life insurers from the emerging markets meanwhile is forecast to grow by 2.4 percent in 2012 and 8.8 percent in 2013, coming from a negative 4.8 percent in 2011.

Globally, life insurance premiums are anticipated to register a flat growth rate in 2012, coming from a contraction of 2.9 percent. But it is forecast to expand by 3.2 percent this year and 3.9 percent in 2014.

“Global life insurance premiums are projected to grow by roughly three percent, fuelled by a strong rebound in emerging Asian markets,” Swiss Re said in a report.

Premium growth will come from increased attention to risk protection such as term life insurance, as regulatory changes and low investment yields -- due to low interest rates – will continue to dampen savings product growth.

“It is important to note that there are huge health protection gaps that exist in many key emerging Asian markets, including India (with a potential shortfall of $43.6 billion in 2020) and China (with a potential shortfall of $73 billion in 2020), and such gaps will drive consumers towards risk protection products,” the respected global reinsurer said.

Meanwhile, global non-life premiums will post positive growth as reflected by strong underwriting results. It said that rates in advanced markets were stable to slightly up last year.

However, reserve releases especially in the US are expected to dry up. Supporting a stronger pace of price increases, specifically in the casualty line.

“The non-life insurance business in Asia has maintained strong growth momentum in the past years, partly due to proactive government policies to stimulate economic expansion through infrastructure investment. A steady recovery in trade activities, a boom in the asset and property markets, and sustained investment in regional infrastructure will continue to support non-life insurance premium growth in Asia in 2013. Furthermore, growth will also be driven by improved risk awareness among corporations and households in the aftermath of a series of natural catastrophes in 2011/12,” Swiss Re said in its report.

The Insurance Commission (IC) and the Philippine Life Insurance Association (PLIA) is forecasting that the total premium income would surpass the P100-billion mark.

At the end of 2011, total premium income of the life insurance industry hit P86.3 billion, a new record high for the industry. That is a 21-percent growth rate over the P70.7 billion reported in 2010.

In the first semester of 2012, premium income already surpassed the P50-billion level, driven by the introduction of new protection products, variable or investment-laced life (VUL) products, and the double-digit growth of policies sold through bancassurance.

The IC said that the aggressive behavior of the industry is spurred by the strong economic growth, as well as the increased competition between the top 10 life insurance players, mostly foreign dominated.

Aside from the contribution of the premium income coming from traditional protection products and the investment-laced variable or unit-linked products, the IC is looking at the micro-insurance sector as increasing its share of the premium pie.

The Philippine Insurance and Re-insurance Association (PIRA) said that the increasing number of natural catastrophes and low interest rates in the past two years have taken its toll on the industry. PIRA is the trade organization of the country’s non-life insurers.

Due to the unprecedented number of major catastrophes in the past years, re-insurance premiums had been jacked up as the global re-insurance market.

Nonetheless, PIRA forecasts a seven to 10 percent growth in 2012 in terms of premiums earned.

At the end of the third quarter this year, premiums earned reached P15.5 billion. In 2011, premiums earned amount to P22.1 billion.