Insurance takes up record 2.3% of GDP

MANILA, Philippines — The pandemic has compelled Filipinos to acquire private savings which they can tap in times of emergency, pushing insurance penetration in the Philippines to a record 2.3 percent of gross domestic product (GDP) in the first quarter.

Insurance Commissioner Dennis Funa told The STAR the growth can be attributed not only to the increase in Filipinos enrolling in insurance policies, but also to the economic decline posted during the period.

“The data is a bit warped nowadays. It does not reflect a normal situation. The reason is that the GDP has gone down from the previous years. So, the denominator does not reflect a continuity of growth,” Funa said.

Despite this, Funa said the insurance industry has seen a membership hike during the health crisis as Filipinos realize the importance of saving up to prepare for unforeseen events like the pandemic. He added the growth would materialize, with or without the GDP drop.

“It [clientele] has also been increasing, but it would not be at 2.3 [percent] if under normal times the growth is still real,” Funa said.

Insurance penetration or the contribution of the insurance industry to the economy, ballooned to an all-time high of 2.3 percent in the first quarter from 1.76 percent a year ago, according to the Insurance Commission (IC).

During the period, however, the economy registered its fifth consecutive quarter of decline at 3.9 percent, preceding the growth of 11.8 percent in the second quarter thanks to a low base, too.

Likewise, the IC reported that Filipinos raised their average spending on insurance by more than 26 percent to P912.2 per individual, from P723.43.

As such, the industry’s profit grew by nearly 46 percent to P11.84 billion in the first quarter from P8.13 billion a year ago. Similarly, premiums jumped by about 28 percent to P99.88 billion from P78.15 billion as insurance firms shift to digital platforms to expand their network in marketing their products.

They also accelerated their investments to grow their combined capital by close to 17 percent to P1.67 trillion. However, the industry’s net worth plunged by over eight percent to P315.81 billion as the inflation of liabilities outpaced the growth of assets.

The industry has welcomed a new player in the past 12 months to increase the total number of insurance firms in the Philippines to 133.

Funa credited the industry’s first quarter growth to multiple factors, particularly the IC’s push to move products to the digital and the policy to consider insurance providers as frontline workers.