MANILA, Philippiines—Despite the pandemic-induced recession, life insurers’ sales grew by 5.9 percent to P247.7 billion in 2020, according to the Insurance Commission (IC) on Tuesday (April 20).
In a statement, the regulator said the life insurance sector’s premium income in 2020 rose from P233.9 billion in 2019.
“Of this increase, changes to variable life insurance premiums accounted for 7.7-percent growth, from P170.1 billion in 2019 to P183.24 billion in 2020, with single premiums and renewal premiums both growing by 19.7 percent and 13.6 percent,” said Insurance Commissioner Dennis Funa.
“Premiums earned by traditional life policies likewise grew 1.1 percent from P63.8 billion in 2019 to P64.5 billion in 2020, with renewal premiums increasing by 13.7 percent,” Funa added.
Funa said despite the tougher times wrought by the COVID-19 pandemic, “it has been observed by the financial sector leaders that generally the savings of the middle-class sector grew due to restraints in consumer spending.”
As a result of the requirement to increase capitalization to at least P900 million, 31 life insurance firms’ combined paid-up capital climbed to P25.3 billion in 2020 from P23.5 billion in 2019.
Aggregate assets also rose to P1.53 trillion from P1.42 trillion in 2019. “This may be attributed to the growth in the industry’s total investments, both in traditional and segregated funds, by 6.7 percent, from P1.39 trillion in 2019 to P1.48 trillion in 2020,” Funa said.
The larger asset base meant that the sector had more resources and better capability to assume its liabilities.
But Funa said the pandemic still reared its ugly head in some negative financial impacts on life insurance firms.
“For one, the aggregate benefits paid by the industry in 2020 contracted by 10.1 percent to P69.4 billion from P77.1 billion in 2019,” Funa said.
“It is highly likely that this contraction is due to the various difficulties encountered in the processing, filing, and payout of claims as an effect of certain community quarantine restrictions imposed by the national government to curb the spread of COVID-19,” Funa added.
“The life industry’s total new business annual premium equivalent (NBAPE) decreased by 19.8 percent to P46.2 billion in 2020, from P57.6 billion in 2019,” the IC chief said.
“This decrease may be attributable to the restrictions on face-to-face selling of insurance products due to said community quarantine measures,” Funa added.
NBAPE was a global standard adopted by the IC as a benchmark for domestic sales performance.
“The industry grappled with the on-and-off quarantine and lockdown measures, and the fact that we were unable to continuously offer insurance agents’ examinations greatly hampered the production of insurance companies,” Funa said.
“The IC is hopeful that the negative indicators will improve in 2021, especially with the rollout of the vaccines towards the third and fourth quarters of the year,” Funa said.
“It will be interesting to see the impact of the shift from face-to-face selling to remote selling via videoconferencing technologies in the sale of insurance products, which was already institutionalized in the circular letters issued by the IC,” he said.
“Also, we also hope to see the impact of the increased awareness of the importance of having life insurance as a way to provide security and peace of mind amid the threats of the COVID-19 pandemic to the lives and health of the Filipino people,” Funa added.