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PH insurance industry upbeat despite Covid

Industry experts expressed optimism on the insurance market despite the lingering impact of the Covid-19 pandemic on players, policyholders and the broader economy.

In a virtual forum organized by The Manila Times on Tuesday, Insurance Commission (IC) Commissioner Dennis Funa reported the income of life and nonlife insurance companies and mutual benefit associations improved in the first quarter of the year.

Citing data from unaudited quarterly reports on select financial statistics, Funa said the first-quarter income of these firms and associations rose by 45.84 percent to P11.85 billion in January to March from P8.13 billion last year.

Total premiums earned also posted a double-digit growth of 27.81 percent in the first three months to almost P100 billion from P78 billion year-on-year.

Funa said the life sector recorded a 38-percent higher income of P9.4 billion during the period from the previous year's P6.8 billion.

The non-life sector's total net income also surged to P1.19 billion in the first quarter from P164 million year-on-year.

"Actually, the current amount is even higher than the prepandemic figure of P1.04 billion back in the first quarter of 2019," he noted.

Philippine Insurers and Reinsurers Association Executive Director Michael Rellosa highlighted the resiliency of the nonlife insurance sector.

Rellosa said the nonlife sector reported a 67-percent higher net income of P5.5 billion last year from P3.3 billion in 2019.

He noted that the increase was achieved despite nine out of 10 nonlife insurance companies recording lower premiums during the period.

"The income increase was due to the decline in losses paid by insurance companies. Simply put, [fewer] cars on the road resulted in [fewer] accidents and [fewer] accidents meant less insurance claims," Rellosa explained.

Collectively, he said, the industry's incurred losses went down by more than 20 percent, which lowered the loss ratio to 41 percent in 2020 from 47.1 percent in 2019.

Rellosa added gross premiums of the nonlife sector declined by 16 percent to P75.9 billion from P90.1 billion year-on-year.

Net premium of the sector was also down 15 percent to P40.7 billion from P47.7 billion in 2019.

Rellosa said the drop in premium was caused by a decline in car sales, which prompted the 16-percent slip in car insurance sales, the decline in shipping activities, which dipped marine insurance by 12 percent, and the reduced mobility, which resulted in other businesses slumping by 49 percent last year.

The fire insurance business was the only gainer as it registered an 11-percent increase year-on-year.

Despite the weaker figures, Rellosa said the industry remains "on solid ground" as it is "more than adequately capitalized."

"Our industry continues to make itself relevant by being proactive," he pointed out, disclosing one big project the industry is working on is the establishment of a Philippine Catastrophe Insurance Facility.

According to Rellosa, the Philippines urgently requires the capability to make the industry more resilient and also make catastrophe insurance more affordable for Filipinos.

When it comes to insurance rates, the industry is also pushing for a big transition to a free market system.

Easy transactions

Meanwhile, Funa highlighted the commission's efforts to cope with the global pandemic, which included the acceleration of its digitalization.

"For the Insurance Commission, we have converted most of our existing manual operations into streamlined internet-based processes for fast, easy and safe transactions among our regulated entities," he said.

The commissioner added the IC crafted and issued policy interventions, which directly helped the public.

"When the going gets tough, insurance will keep our people going. This is what we're here for, to bring relief and assistance when contingencies strike and we will not renege on that," he said.

"In the future, even after this pandemic, we expect technology will continue to evolve, providing greater efficiency in the way our processes are conducted," he said.

Funa said manual operations were converted into streamlined internet-based processes for fast, easy and secure transactions among its regulated entities.

Insurance companies used the internet insurance market to distribute their products and provide a smoother customer experience to the insuring public, according to the commissioner.

More importantly, he said, his agency has enjoyed the trust, unwavering support and collaboration of its regulated entities, making navigating through these unusual times less difficult.

"And because of these, I am confident enough to declare that the industry outlook for 2021 is very hopeful," the IC chief added.

He acknowledged "2021 will likely not bring sterling production" given the country's current state of flux.

Nonetheless, Funa expressed confidence the insurance industry will remain robust, vigorous and dependable, and capable of adequately and actively securing life, property and health under the pandemic.

Rahul Hora, president and chief executive director of AXA Philippines, spoke about the opportunities presented by digital transformation.

"Truly, digital transformation will ensure the insurance outlook going forward will continue to be very, very promising," he said, adding artificial intelligence (AI) is the first and primary technology used by the sector.

Hora said AI has enabled insurance companies to give more efficient, effective and personalized service by allowing them to create custom products.

AXA Philippines has created a social media command center and its own app, Emma, which is designed to serve consumers, health and financial concerns.

Amid the pandemic, Hora said, health is an important developing trend in the insurance sector, as a large portion of health spending is still borne by Filipinos out-of-pocket.

"This is something we see needing to change for the future. And that is a role HMO (health maintenance organization) and the private insurance industry have to play in a very significant way, and we will see this trend emerging in the years to come," he added.

Pru Life UK is the business forum's co-sponsor with AXA, Cocogen Insurance, Cocolife and Hungry Workhorse as special partners.

The event's organization partners include the British Chamber of Commerce of the Philippines, French Chamber of Commerce and Industry in the Philippines, Davao City Chamber of Commerce and Industry Inc., Financial Executives Institute of the Philippines, Italian Chamber of Commerce in the Philippines, Management Association of the Philippines and The Manila Times TV.

Click here to watch.


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