Insurance expands contribution to GDP

MANILA, Philippines — The pandemic has pushed more Filipinos to hike their savings, with insurance coverage becoming a top priority since last year.

The Insurance Commission (IC) said insurance penetration or the share of premiums to gross domestic product (GDP), went up to 2.05 percent in the second quarter from 1.58 percent a year ago, as Metro Manila and nearby provinces were placed under lockdown due to the resurgence in COVID-19 cases.

Likewise, insurance density or the average spending on insurance grew nearly 36 percent to P1,704.27 from P1.255.51 a year earlier, the IC added.

IC commissioner Dennis Funa said premiums sold by insurance firms grew more than 37 percent to P187.13 billion, while benefits issued improved nearly 47 percent to P64.94 billion.

These resulted in higher profit for insurers, jumping over 29 percent to P24.63 billion as the economy’s reopening in May and June heightened the capacity of Filipinos to buy life and non-life policies.

Assets managed by life and non-life insurers, including mutual benefit associations (MBAs), also rose by about 11 percent to P1.98 trillion.

“The growth of the life and non-life insurers’ and MBAs’ aggregate premiums and contributions earned and their aggregate net income in the second quarter of 2021 are indicative of economic recovery amid the COVID-19 pandemic,” Funa said.

On the other hand, liabilities owed by the industry surged almost 16 percent to P1.63 trillion. As a result, the combined net worth of insurers and MBAs declined more than seven percent to P350.82 billion.

Also, the industry’s paid-up capital and guaranty fund went up 12 percent to P70.93 billion. Investments poured on insurance amounted to P1.75 trillion, growing over 12 percent from P1.56 trillion.

Based on data from the IC, the industry welcomed a new player in the past 12 months to raise the total number of insurance firms in the Philippines to 135.

The industry recorded the highest ever insurance penetration of 2.3 percent in the first quarter, although Funa said the growth should be attributed not only to the increase in Filipinos enrolling in private savings, but also to the GDP decline of 3.9 percent during the period.