‘Insurance demand slowing as high costs squeeze budget’

MANILA, Philippines — Rising cost of living is forcing more Filipinos to put off life insurance purchases, while some business owners are withdrawing money from their existing policies to fund operations, with demand expected to weaken further over the next six months, according to FWD Life Insurance Corp.

FWD Philippines president and CEO Soon Liang Lau said the insurer has observed slower demand among lower-income customers as households prioritize essential expenses amid persistent inflation and economic uncertainty.

During a recent media roundtable, Lau said the slowdown has also extended to small and medium-sized business owners, some of whom have tapped their insurance investments to cover higher operating expenses, particularly fuel costs.

The withdrawals became more noticeable in the second quarter as businesses struggled with higher diesel prices and other expenses needed to keep their operations running.

Lau said the company is advising affected policyholders to retain sufficient coverage even when they need to withdraw part of their funds, rather than surrender their insurance policies altogether.

He warned that weakness in the mass market could worsen over the next six months as more households struggle to set aside money for financial protection.

Despite these challenges, Lau said FWD continues to record growth, supported by relatively resilient middle-income and affluent customers, as well as its bancassurance partnership with Security Bank Corp.

Bancassurance refers to the sale of insurance products through banks, allowing insurers to reach customers through existing banking relationships.

The company’s agency distribution business has also remained stable despite weaker demand in certain market segments.

The slowdown in some customer segments comes even as the broader insurance industry continues to report higher premium collections.

According to the Insurance Commission (IC), life insurance premium collections rose by 17.9 percent to P229.98 billion in the first half from P195.05 billion a year earlier, largely driven by variable life insurance products.

Meanwhile, FWD maintained its position as the country’s largest life insurer in terms of new business annual premium equivalent (NBAPE) in the first half, recording P5.26 billion, 23.5 percent higher year-on-year.

The company captured a 12.2-percent market share, supported by its agency network, bancassurance operations and expanding product offerings.

FWD chairman and former Philippine central bank governor Jose Cuisia Jr. said the Philippine insurance industry still has considerable room to expand, although limited household purchasing power remains a major obstacle.

“What we lack is the purchasing power because our per capita income is still way below Thailand, Malaysia, not to mention Singapore,” Cuisia said.

He also pointed to the country’s wide income inequality, saying stronger growth in the middle-income population would help expand insurance ownership over the longer term.

Latest IC figures showed that insurance penetration stood at 1.96 percent in the second quarter, up from 1.8 percent a year earlier but below the 2.04 percent recorded in the previous quarter.

Amid changing customer preferences, FWD is expanding its traditional insurance offerings to complement variable universal life (VUL) policies, which combine life insurance protection with investments whose returns depend on market performance.

Looking ahead, Lau identified P10 billion in annual new business sales as an important milestone, while expressing ambitions to eventually expand the business toward P15 billion to P20 billion.

However, he did not provide a firm timetable or formal growth target for reaching those levels.

The company is also looking to strengthen its presence outside Metro Manila, particularly in Cebu, as it seeks to expand its distribution network in the Visayas and Mindanao.

Lau said building an agency network in provincial markets requires substantial investment, particularly in areas where established insurers already have a strong presence.

He also expressed hopes of making FWD’s customer servicing operations more artificial intelligence-enabled within the next six to 10 months to improve efficiency and customer experience.