Life insurers bullish on robust growth

MANILA, Philippines — A group of life insurance companies is optimistic that the industry would be able to book double-digit growth this year on the back of solid macroeconomic fundamentals, favorable client demographics and improving financial literacy in the country.

In an interview, Philippine Life Insurance Association Inc. (PLIA) president Benedict Sison said the life insurance sector is confident of achieving strong growth in premiums this year.

“I can’t give an exact number, but I think double digit growth for 2020,” he told reporters on the sidelines of the induction ceremony of the PLIA board of directors and committee chairpersons for 2020.

Sison, who also heads Sun Life of Canada Philippines Inc. as its chief executive officer, said the industry’s positive outlook is driven by several factors.

“One is favorable demographics--growing middle class and increasing prosperity. And then, increasing financial literacy, and also the advancement of technology. Believe it or not, that would help,” he said.

The PLIA chief said the industry’s growth this year would also be driven by solid macroeconomic fundamentals.

“Moody’s (Analytics) for example, is forecasting 6.7 percent GDP growth this 2020 despite all the internal and external factors. Then the other one is Pulse Asia, the recent survey they conducted, (which showed) the optimism rate is 93 percent. Nine out of 10 Filipinos are optimistic,” he said.

This is despite the presence of domestic and external risks, such as the spread of the novel coronavirus, as well as trade tensions between the US and China.

Sison said there is still a huge opportunity for growth in the Philippines, considering the low penetration rate of the insurance market.

“If I were to make a guess, I think it’s a little less than two percent,” the industry leader said. “So there’s a really huge opportunity, we’re really positive about this.”

To expand insurance penetration and spur the industry’s growth, Sison said PLIA will continue its focus on improving financial literacy and enabling the use of digital technologies.

He said PLIA will also continue to forge stronger alliance with the Insurance Commission (IC) to ensure proper regulation of the life insurance industry.

“That said, we are mindful and need to stay vigilant of regulatory trends and court decisions that may not be to the best interest of our clients and the industry,” he said in a speech during the event.

These include the bill on Collective Investment Schemes, which may split the regulation of variable life insurance products between the IC and the Securities and Exchange Commission.

Sison also mentioned the requirement of the Credit Information Corp. to collect policyholders’ data to determine their credit-worthiness, the possible change in the judicial interpretation of concealment, and the application of the incontestability clause in the evaluation of claims.

He said the industry is also wary of the impact of the HIV law on insurers’ product designs, underwriting and claims processing.

According to the latest data from the IC, the insurance industry’s total premium income from January to September 2019 amounted to P224.97 billion, 2.77 percent up from P218.91 billion in the same period last year.

The IC said P172.05 billion of this amount came from the life insurance sector, whose sales were driven mainly by variable life insurance products.