Car sales boom prompts growth in insurance industry

The insurance industry’s premiums grew 11.97 percent to P259.6 billion in 2017 partly due to robust car sales and gains in the stock market, said Insurance Commissioner Dennis B. Funa on Friday.

On the sidelines of the Insurance Commission’s 69th anniversary celebrations on Thursday, Funa told reporters premiums in the life insurance sector rose by a tenth year-on-year to P202.3 billion, while the nonlife sector posted a bigger 16.71-percent jump to P48.6 billion.

“We had a very good year in 2017, a very healthy insurance industry. Eventually, it is the government that will benefit because much of the assets of the insurance industry are invested in government bonds and, of course, a portion of those are also invested in equities … This is very good news for the insurance industry in particular and our country in general,” according to Funa.

In the case of the life sector, Funa noted that the “driving force” of sales was variable insurance products, which became more attractive last year due to the surge in the equities market.

“It’s the investment products that the insuring public are looking into and find attractive nowadays,” Funa explained.

As for the nonlife insurance sector, Funa said sales were brisk amid sustained economic expansion.

Specifically, “one big growth sector is car insurance,” he said.

“Sales of vehicles even grew faster at the end of last year,” he noted, ahead of the implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) Act, which raised excise taxes on cars. The car manufacturing industry said customers already made purchases before the government could raise taxes.

For 2018, Funa expects the industry to sustain this robust growth as the stock market continues its gallop while the nonlife sector is expected to benefit from the rollout of big-ticket infrastructure projects under the ambitious “Build, Build, Build” program.