Insurance Commissioner Dennis B. Funa on Tuesday said the insurance industry is seen maintaining a steady growth in 2017 on the back of strong purchasing power of an expanding middle-class under the Duterte administration.
“Due to the increase in confidence in the Duterte administration, the Philippine economy is expected to continue its expansion. This would benefit the different industries, translated into a considerable amount of potential for the insurance industry that is facing the challenges brought about by the Asean integration,” Funa said.
According to Insurance Commission data from 2011 to 2015, insurance density representing the average amount spent on insurance by each individual in the country grew by 84.1 percent to P2,286.0 in 2015, from P1,241.5 in 2011.
Insurance penetration, which is the ratio of insurance premium to GDP or the contribution of the insurance sector to the economy, also improved by 45.8 percent, from 1.02 percent in 2011 to 1.75 percent in 2015.
The market penetration rate, or the ratio of individuals with life-insurance coverage to the country’s population increased by 125.64 percent, from 18.29 percent of the population of 94.2 million, or 17.2 million, in 2011 to 41.27 percent of the population of 101.6 million, or 41.9 million, in 2015.
The IC said that despite the steady increase in insurance density, insurance penetration and penetration rate, the figures are still considered low compared to other Asean countries.
The insurance commissioner said the IC will implement regulatory reforms and enhancements to address these problems and increase the growth rates to help the country become more competitive.
According to Funa, one of the important drivers in the growth of the insurance industry is the higher capitalization requirements of insurance companies leading to an increase in the public’s confidence in insurance, and the recent mandatory increase in the minimum capitalization requirement of insurance companies from P250 million to P550 million.
“Despite the decrease in the number of insurance companies in view of the implementation of the higher capitalization requirements, we remain optimistic that the industry will continue its growth. Considering that the industry is well-capitalized, we expect that there will be an increase in market penetration owing to the increase in confidence on the industry,” Funa said.
He, likewise, said there must be a regulation in place to facilitate investments by the sector in infrastructure and public-private partnership projects.
“Insurance companies will also be required to observe new financial regulatory requirements on financial reporting, risk-based capital and valuation standards for policy reserves. To ensure that the solvency of insurance companies are determined and monitored in accordance with internationally accepted accounting, actuarial and insurance core principles, the IC implemented this regulatory change,” Funa added.
Funa also recognized that increase in awareness and understanding the need and benefit of insurance would drive growth in the long run. He said one of the drivers of growth in the industry is the evolution of its different channels.