Life insurance industry seen to grow at an annual 9.1%

The Philippine life insurance industry is poised to post one of the fastest growth rates in the next nine years among emerging markets, global insurance and reinsurance services provider Munich Re Group said.

In its “Insurance Market Outlook for 2017/2018” report released on April 20, Munich Re said it expected life insurance premiums in the Philippines to register a compound annual growth rate (CAGR) of 9.1 percent from 2017 to 2025.

Among emerging markets, sales growth of life insurers in the country during the nine-year period would be surpassed only by the United Arab Emirates’ 10 percent and Indonesia’s 9.1 percent, while exceeding China’s 8.8 percent and Brazil’s 8.1 percent.

Munich Re projected life insurance sales in Colombia to post a CAGR of 7.2 percent from 2017 to 2022; 6.9 percent in Mexico and Thailand; 6.2 percent in India; 5.3 percent in Poland; 4.8 percent in Israel; 4.7 percent in Finland and Malaysia; 4.4 percent in Argentina; and 3.1 percent in Chile.

“In most emerging markets, we project relatively stable premium development at a high level: premium growth for 2017 and 2018 is expected to average 6.5 percent in Eastern Europe, almost 8.5 percent in Latin America, and 8 percent in the Middle East and North Africa region,” Munich Re said.

Emerging markets in Asia, meanwhile, were expected to be “influenced by premium development in China,” according to Munich Re.

“We anticipate that premium growth [in emerging Asia] will be down by more than 50 percent in 2017, compared with almost 16 percent last year. The reasons for this are as follows: shorter-term savings products in life insurance are suffering from decelerated economic dynamism and lower investment results. In addition, recent regulatory measures have dampened the aggressive sale of these products as they were primarily designed for asset management purposes and offered virtually no insurance coverage,” Munich Re explained.

“However, globally speaking, the [emerging Asian] region will probably still exhibit by far the highest growth in life insurance premium volume, at an average rate of 13 percent for the years 2017 and 2018,” Munich Re added.

As for industrialized countries, Munich Re said premium development “remains challenged by low interest rates.”

“In 2016, many markets showed a significant decline in particular in sales of unit-like and single-premium savings products—for instance, in Japan, Germany and Italy,” Munich Re noted.

As such, Munich Re said that “for the years 2017 and 2018, we project that industrialized countries will see premium growth of around 3 percent on average, which is likely to continue to fall short of gross domestic product growth.” —BEN O. DE VERA