Insurers post lower premium income in 2020

MANILA, Philippines — The local insurance industry recorded a lower premium income from January to September  2020 as the non-life insurance sector continued to see a slowdown in premium generation, according to a report from the Insurance Commission (IC).

Based on the IC’s 2020 Accomplishment Report obtained by The STAR, the insurance industry generated P216.5 billion in premium income from January to September 2020, nearly four  percent lower than the P224.97 billion recorded in the same period in 2019.

The contraction, however, slightly eased from the 4.1 percent decline recorded as of end-June 2020.

Broken down, the IC said the non-life insurance sector posted P35.46 billion in net premiums written during the nine-month period , 19.45 percent lower than the P44.02 billion recorded in the same period in 2019.

On the other hand, the life insurance sector recovered from the slight decline in the first semester of last year, reporting a 0.95 percent growth in premium income to P173.69 billion as of end-September from P172.05 in 2019.

The IC said there was an increase in renewal premiums for life insurance policies during the period. Variable life insurance renewals rose nearly 14 percent to P71.85 billion, while renewals for traditional life insurance climbed 7.41 percent to P35.14 billion.

As a result of the industry’s performance, insurance penetration, or the ratio of the premium volume to the country’s gross domestic product, stood at 1.68 percent in the third quarter of 2020, slightly down from 1.69 percent in the same quarter in 2019.

Data from the IC also showed that the insurance industry’s total assets as of end-September 2020 expanded by 2.83 percent to P1.79 trillion from P1.74 trillion in the previous year.

The bulk or P1.4 trillion of the amount came from the life insurance sector, a 0.96 percent growth from 2019, while P274.50 billion accounted for resources of non-life insurance companies, 9.92 percent up from the previous year’s level.

Meanwhile, the IC said the total premium income of the pre-need industry stood at P12.73 billion in the first nine months of 2020. This was 25.07 percent lower than the P16.99 billion in the same period in 2019.

The Philippine Insurers and Reinsurers Association (PIRA) said earlier non-life companies suffered from a decline in sales last year due to the lockdowns imposed to contain the spread of COVID-19.

On the other hand, the Philippine Life Insurance Association said the life insurance industry may see some degree of recovery in the third and fourth quarters of 2020 owing to the various regulatory relief measures implemented by the IC.

Nevertheless, both life and non-life sectors expressed optimism for their recovery prospects in 2021, on the back of the expected overall economic bounce back this year. PIRA said growth would be driven by increased demand in protection products, while PLIA said the use of digital selling tools would help shore up premiums.

However, PIRA said it also saw some issues that may pose a challenge for industry players.

For one, PIRA said failure to control the spread of the COVID-19 virus could derail the recovery of the economy and insurance industry.

Insurers are also faced with the challenge of strengthening their financial strength amid the pandemic, in preparation for the scheduled increase in the minimum net worth requirement to P1.3 billion by the end of next year.