Life insurance firms set P100-billion premium target

MANILA, Philippines -  The Philippine Life Insurance Association (PLIA) said they are targeting total premium income to breach the P100-billion mark and double the number of insured Filipinos by end-2013.

At the end of 2011, total premium income of the life insurance industry hit a record P85.8 billion, 21 percent more than the P70.7 billion reported in 2010.

PLIA said the projected increase in premium income will be aided by the expansion in the insurers’ distribution networks and the increased popularity of microinsurance.

The distribution network of the industry comprises the agency force, bancassurance, brokers, and to a certain extent, direct marketing. For the growing microinsurance sector, the distribution network includes the agency force, microfinance institutions (MFIs) and rural banks.

“The agency force is still the backbone of the life insurance industry,” said Rex Ma. A. Mendoza, president and chief executive officer of the Philippine American Life and General Insurance Co. (Philam Life).

The fastest growing and producing outlet, however, is the bancassurance distribution network. Bancassurance allows a life insurance firm to sell its products through a bank’s branch network.

“The partnership between a bank and the insurer is very productive,” Omar T. Cruz, president and chief executive officer of BPI Philam, said. BPI Philam is the joint venture bancassurance company between the Bank of the Philippine Islands (BPI) and Philam Life.

The country’s banking system has one of the most extensive distribution network in the country’s financial system, and its electronic payment system increases the advantages of a strategic partnership with a bank.

It likewise gave rise to a new breed of financial advisers trained by the insurance industry to sell life insurance products designed for bank clients. The number of licensed financial advisers, known as variable life agents, reached a peak of 7,863 in 2010.

Licensed agents, on the other hand, shrunk from 41,065 in 2006 to just 34,364 in 2010.

Meanwhile, PLIA president George D. Mendoza said the industry’s premium income could reach the P100-billion level granted that the Greek debt crisis and the US economy “does not get any worse.”

“We have been growing by double digits in the past few years, and the country’s fundamentals remain strong,” Mendoza added.

But in terms of the increase in policy-in-force, the growing popularity of microinsurance can make a big contribution. With the aggressive marketing of microinsurance products by 14 life insurers this year, the expansion of the number of Filipinos with insurance protection will grow exponentially.

Nine life insurers have been licensed to distribute microinsurance in 2011. Another five have applied, and are expected to start selling this year. There are also eight non-life insurance firms and 15 mutual benefit associations (MBAs) that are selling microinsurance.

Microinsurance products are cheaper, simplier life products although the scope and value of the claims are likewise lower.