Philippine insurance market third smallest in East Asia

MANILA, Philippines - The Philippines has been ranked as the third smallest in the East Asian region in terms of insurance premiums, better only than floor dwellers Macau and Brunei, according to Swiss Reinsurance (Swiss Re).

The Philippine market for life insurance is worth less than $2 billion (P57 billion) compared to Japan’s $560 billion. Macau’s life insurance market is worth $408 million and Brunei worth $128 billion.

Combining with the premiums earnings of the non-life insurance sector, total premiums written were a mere P75 billion or a decline of nearly three percent from the 2008 levels.

Philippine Prudential Life Insurance Co. (Prudential Life) president and chief executive officer Gregorio D. Mercado lamented Filipinos were not getting enough protection in the light of the worsening climate conditions, such as typhoon Ondoy.

The country’s penetration levels are also among the weakest in the region, versus the nearly 17 percent of Taiwan, the 11 percent of Hong Kong, the 10.4 percent of Korea, the nearly 10 percent of Japan, and the 6.8 percent of Singapore.

However, Mercado said that the improving economic conditions and the innovative efforts of the Philippine private insurers favors growth for the insurers and the insuring public.

“Prudential Life, for example, will be introducing two new products soon, while we have increased our participation in efforts to introduce the more affordable microinsurance to the greater population,” he added.

The country’s 34 life insurers have been forced to increase its capital base to cope with increased risks as well as expand its influences. But further consolidation is necessary to weed out the inefficient thus protecting the few policies holders.

Mercado, who is also the president of the prestigious Insurance Institute for Asia and the Pacific (IIAP), said that aside from increasing capital and resources, the industry is in talks with regulators for policy changes that will improve the quality of sales and financial agents.

Meanwhile, the Prudential Life reported gross premiums of P649.7 million in the first nine months of 2010 while claims paid amounted to P64.69 million.

Policyholders stood at 1.5 million with policies-in-force are worth at over P51 billion.

Mercado said that they had a balance of individual and group insurance policyholders. And insured premiums ranged from P10,000 upwards.

“We have been selling microinsurance long before it was called as such,” he added.

Nonetheless, Prudential Life and other life insurers have joined rural banks and other microfinance institutions (MFIs) in selling microinsurance. The country’s financial sector has been doubling efforts to protect the population through various insurance products distributed by various institutions.