2015 premium income outlook bullish

MANILA, Philippines - The Insurance Commission (IC) is confident that the country’s insurance industry could hit a record P200 billion in 2015.

“A P200-billion total premium income for 2015 is achievable,” IC commissioner Emmanuel F. Dooc said. He however refused to set definite figures

“We need the 2014 final numbers as baseline for our definite projection for 2015,” Dooc pointed out.

Total premium income is forecast to reach P170 billion this year, given the strong performance of the life and non-life insurance sector owing to the limited damage of natural catastrophes this year.

“If we have a good last quarter (this year), we might even exceed P170 billion,” Dooc added.

As of the first nine months of 2014, the industry’s total premium income amounted to just P132.9 billion, down 15.26 percent from the P156.8 billion recorded in the same period in 2013.

Life insurers dragged the industry down as total premium income shrunk 19.4 percent and net income contracted 10.45 percent.

Non-life insurers total gross premiums written (GPW) expanded 0.23 percent but earnings fell 38.89 percent, due mainly to the huge claims from several natural disasters.

However, 2013 was a good year for the life insurance sector particularly from the outstanding sale of single premiums. It was a difficult year meanwhile for the non-life sector due to huge claims in relation to the devastation brought by Typhoon Yolanda.

In 2013, total premium income hit P198.1 billion, the highest level for the country’s insurance industry. Net income reached P24.6 billion while assets ballooned to over P891 billion.

This year, life insurers experienced slower growth while the non-life insurers escaped paying huge claims from limited and weaker natural catastrophes.

But capital build-up to meet regulatory requirements as well as for expansion, and the entry of new players brought the industry’s assets to a record P1 trillion after just nine months in 2014. In 2009, total assets were valued at P560 billion.

Dooc also boosted that industry investments ballooned to a record P800-billion investible funds.

“The insurance industry is one of the biggest players in bond market, in both the peso- and foreign currency market, among the leaders in the country’s capital markets,” the IC Commissioner said.

But the bigger challenge is the low penetration ratio, or the number of insurance in relation to the country’s population.

The Philippines’ insurance penetration rate in 2009 stood at a miserable 0.9 percent of gross domestic product (GDP).

In the banner year 2013, it rose to 1.77 percent. The target for 2015 is to reach 2.5 percent.

Dooc said that the Asean average rate is over three percent with the Philippines ranking fifth, or in the middle of the 10-member nation association. It is no surprise that Singapore ranked number one with a rate of six percent.