Insurance firms in for growth

MANILA, Philippines—The country’s insurance sector is expected to post a significant growth in revenues over the next few years due to rising household incomes and enhanced regulations, according to Fitch Ratings.

“Fitch expects the trend of strong growth in life insurance premiums and more moderate growth in the nonlife sector to continue,” it said in a special report on the country’s insurance sector released Monday.

Preliminary figures from the Insurance Commission showed that in 2013, combined premium collection of life and nonlife insurance companies in the country jumped by 47 percent year on year to P210 billion.

Fitch attributed the growth mainly to robust economic growth that is increasing Filipinos’ purchasing power and improving their ability to buy insurance protection.

The credit-rating agency likewise cited positive developments in the regulatory regime.

These include the relaxation of bancassurance rules, promotion of micro-insurance and tightening of capital requirements.

Fitch also cited the low penetration rate of insurance, thus the large room for growth.

The Philippines’ insurance penetration rate, measured as the proportion of combined premium collection of insurance companies to the country’s gross domestic product (GDP), was estimated at 1.45 percent as of the end of 2012 and 1.89 percent as of the end of the third quarter of last year.

These are much lower than the penetration rates for Malaysia and Thailand, which stood at 4.8 percent and 5.02 percent, respectively, in 2012.

“The Philippines’ low penetration rate suggests immense growth potential in the next few years,” Fitch said.