IC digitalization program pushes insurance density to record high

MANILA, Philippines —The Insurance Commission (IC) has banked on the government’s transition to digital platforms to boost the average spending of Filipinos on financial products and the contribution of industry premiums to economic output.

IC Commissioner Dennis Funa told The STAR that the insurance industry continues to gain from the shift to online transactions helping expand its reach amid the COVID-19 pandemic.

“(While) a lot of industries suffered tremendously, the insurance industry was not much ravaged by the pandemic. The word resilient really showed itself in our case, (and) it’s actually the use of insurance technology. Were it not for technology, the sales of insurance would decline given that the industry depends on face-to-face meetings,” Funa said.

Funa explained that Filipinos in general would hesitate to invest in a financial instrument without negotiating with someone in person.

As physical transactions were prohibited during strict lockdowns, the industry expected premiums to drop.

“Filipinos will be reluctant to buy something without talking to someone in person, especially on financial matters. The (use of) digital technology facilitated these transactions even if they were not meeting face to face,” Funa said.

The IC chief explained that most contracts signed during the pandemic were settled using digital  signatures unlike prior when both insurers and policyholders require wet ink to close deals.

The industry widened its share to the gross domestic product (GDP) last year by relying on the growing demand for life and non-life packages driven by the health crisis.

Insurance penetration or the contribution of insurance to the GDP in the country inched up to 1.93 percent last year from 1.71 percent in 2020.

Funa said the average payout of Filipinos on insurance products, measured as insurance density, jumped to a record P3,400, from P2,800.

Data showed premiums raised by insurance firms went up by 21 percent to a combined P374 billion from P308 billion.

According to Funa, the pandemic compelled clients to look into their options on how to prepare their pockets for times of emergency. In the medium term, the IC projects insurers to recover to their pre-pandemic levels, especially that quarantine restrictions were lifted.

Despite the pandemic, the industry eked out a one percent growth in premiums to P308.25 billion in 2020 from P304.65 billion in 2019 but profits declined by nine percent to P41.24 billion from P45.12 billion.