Insurer rises above competition, catastrophes

MANILA, Philippines - Despite strong competition and natural catastrophes, Standard Insurance Co. Inc. has managed to perform modestly through proper underwriting, intelligent pricing across all insurance lines, fast claims turn-around, strong partnerships, and sufficient reinsurance cover.

Standard Insurance president Patricia E. Chilip said the company’s reinsurance support remain financially strong, with the capability to respond to claims, especially during catastrophic events.

“We buy a lot of earthquake re-insurance, we buy a lot of capacities to cover our clients,” Chilip said.

Likewise, prudent underwriting and superior reinsurance support steered the insurer away from huge losses, including Typhoon Yolanda.

Standard Insurance’s reinsurance team does annual studies on possible catastrophic events and their worst-case scenarios, so that proper and sufficient reinsurance structure and capacities are set in place. 

Renewal of all reinsurance treaties has been completed, with increased EQ capacity to P6 billion for property, and with Munich Re (rated AA-/ Stable by S&P) still as our lead reinsurer.

“Swiss Re, another highly rated reinsurer, (rated AA- / Stable by S&P), likewise supports our property treaty,” the chief executive said

Standard Insurance is reportedly the largest motor insurer in the industry, insuring around 150,000 motor vehicles with comprehensive insurance in 2014, an upward spiral of 18.9 percent from previous year’s 126,773 units.

Chilip said the non-life insurer recovered from automobiles damage through sufficient re-insurance cover.

“And we had a strong relationship with car dealers, gaining prioritization on the claims over the others, a lot of our strengths is in our partnerships and relationships,” she added.

On the property side, the non-life insurer continued to clean up and steer the property book to a general portfolio comprising ideal risks, specifically general and commercial property insurance lines, rather than the bigger, higher risk industrial lines. 

In a separate statement, the insurer said non-renewal on some major accounts with multi-locations and highly exposed to natural hazards (such as earthquake, typhoons, floods, volcanic eruptions, storm surge) was decisively implemented. 

Simultaneously, aggressive marketing on acceptable risks were done to replace said non-renewals. 

“By end-2014, 90 percent of risks were residential and general/commercial accounts, with the remaining 10 percent accounted for by a few and highly selected industrial and warehouse risks,” the statement said. 

It continued to explain that prudent underwriting was strictly followed, with all property accounts required to pass the Natural Hazards Assessment through the insurer’s Catastrophe risk management system (CRMS).

Last year, gross premium written (GPW) grew by six percent to P2.604 billion, from P2.459 billion in 2013.

As a result of said conservative growth, gross change in unearned premiums substantially decreased resulting in a 17-percent growth in gross earned premiums to P2.3 billion, from previous year’s P1.9 billion.

The low loss ratio relative to the industry shows effective underwriting of risks. 

“The elevated operating expense ratio of 42.9 percent versus 37.4 percent in 2013 is accounted for by ‘allowance for doubtful accounts’ as cleaning up of receivables portfolio was done to start off 2015 with a relatively clean receivables portfolio,” it explained.