Insurance industry posts lower premium income in 1st half

MANILA, Philippines — The local insurance industry recorded a slightly lower premium income from January to June as some players have started to feel the impact of the coronavirus pandemic and mobility restrictions, the Insurance Commission (IC) said yesterday.

According to data released by the IC, the insurance industry’s total premium income from January to June declined by 4.1 percent to P136.09 billion from the P141.91 billion recorded in the same period last year.

The bulk or P107.98 billion of the amount was generated by the life insurance sector, inching down by 0.41 percent from P108.42 billion in the first half of 2019.

Insurance Commissioner Dennis Funa attributed the decline to the 5.36 percent drop in traditional life insurance premiums collected by the sector.

“The single and first-year premiums for traditional life insurance posted a decrease of 62.43 percent and 9.80 percent, while the renewal premiums increased by 2.17 percent,” Funa said.

This outpaced the 1.59 percent increase in variable life premiums during the same period, he said.

Meanwhile, the net premiums written (NPW) by the non-life insurance sector likewise dropped by nearly 18 percent to P22.66 billion from P27.61 billion in the same period last year.

Funa said there was a decline in almost all lines of businesses except for aviation whose premium payments surged by 314.81 percent.

“It can be presumed that this general decline may be attributed to the decrease in the general public’s capacity to pay premiums due to the adverse effects of the COVID-19 pandemic as the second quarter of 2020 marked the pinnacle of the strict imposition of community quarantine guidelines by the national government,” he said.

Nevertheless, Funa said the sector’s net income swelled by 82 percent to P3.35 billion from P1.84 billion in 2019.

“The growth has been attributed to 30.7 percent rise in underwriting gain. There are still 35 companies or more than half of the total companies that reported increases in their net income,” the IC chief said.

Mutual Benefit Associations (MBA), the largest players in the microinsurance business, also reported a total premium income of P5.45 billion, 7.23 percent down from P5.88 billion a year ago.

The sector’s net surplus also shrunk 55 percent to P1.38 billion from P3.08 billion in 2019.

“This can be attributed to the decrease in the collections and other income, which presumably may be attributed to the difficulties encountered in collection due to certain national government community quarantine protocols brought about by COVID-19, and coupled by the increase in operating expenses by 68.91 percent,” Funa said.

Meanwhile, the IC said the life insurance industry’s total assets as of end-June grew by 1.95 percent to P1.41 trillion from P1.38 trillion in the same month last year. Total paid-up capital also rose by more than 10 percent to P25.13 billion from P22.69 billion.

The non-life insurance sector’s total assets grew to P275.08 billion, up from P242.08 billion last year, while net worth jumped to P102.44 billion from P87.92 billion a year ago.

In a separate statement, the IC also reported that the total number of lives covered by microinsurance in the country have increased by 7.86 percent to 39.67 million as of end-June from 36.78 million in the same period last year.

This is despite the 24.79 percent contraction in the number of lives covered by microinsurance policies issued by the non-life insurance sector to 3.79 million from 5.04 million.

“The statistics are indicative that it was the non-life insurance sector that was greatly affected by the implementation of strict community quarantine measures brought about by the COVID-19 pandemic,” Funa said.