Disaster-prone Phl attracts underwriters

CEBU, Philippines - The Philippines, being rated as one of the most disaster-prone countries in the world, remains a huge market for the insurance industry.

Given this fact, people realize how preparing for financial needs – health, savings, education, retirement and income protection – in the future is important.

Moreover, the rising middle class population and the increasing disposable income driven by the developing economy have made the Philippines more alluring to the underwriters.

Rien Hermans, president and CEO of life insurer AXA Philippines, said the recent years have seen a positive development in terms of the increasing need and demand for insurance among Filipinos.

"The country's GDP growth has been growing and that translates to hike in premiums," said Hermans in a press interview yesterday during the company's announcement of its two new branches located in Cebu City.

"We've also experienced good demographics, more and more people (aged 25 to 45) are on the working group now," he further added.

The improving macro-economic environment amid tough economic conditions has maintained the stable outlook for both the country's life and non-life insurance industries.

Hermans has seen this as an opportunity to contribute to the growth through providing financial security to the people in an attempt to change their perception about financial awareness and the importance of being insured.

In the insurance business, the CEO stressed that the trend now is really to modernize the industry through introducing technology-driven products and innovation.

Low penetration

Rahul Hora, the chief agency officer of the company, pointed out the life insurance business has better prospects because of the perceived low penetration rate of people considering insurance as a good investment instrument.

The officials also said the catastrophe risk nature of the Philippines would likely drive the overall industry growth. This, as the need for financial health and emergency security becomes essential in the financial decision-making.

Hora even cited that the incidence of critical illness in the country has significantly risen in recent times because of unhealthy lifestyle, bad food, etcetera.

Thus, health emergencies happen so frequently and that the need for financial resources, in the same way, is even more critical.

The bancassurance system, a partnership between a bank and an insurance firm, has also helped the local financial industry improve.

Hermans added that Cebu province has always been a vital base of the company's operations, noting "the continued growth of our business nationwide is also reflected in the growth of our business in Cebu and the entire Visayas region.

The insurance firm reported yesterday its growth in the region for the past years has been steady with its total agency sales grew to P175 million in 2013, up by 68 percent compared to its 2011 output of P104 million.

According to BJ Legaspi, agency sales director for Visayas and Mindanao, Cebu sales in 2013 reached to P135 million, accounting for nearly 80 percent of Visayas business.

He expressed positive projections for the firm's Cebu 2014 output as it has already produced P122 million in sales as of third quarter of this year, targeting to deliver P162 million by the end of the year.

AXA currently has 91.2 billion euros in revenues and over 1.1 trillion euros in assets under management; it also registered P18.3 billion in total premium income in 2013 nationwide. It employs 157,000 workers and distributors with 102 million clients in 56 countries worldwide.

The insurance firm has also partnered with local banks Metrobank and PSBank for a bancassurance deal to give bank clients easier access to insurance products. (FREEMAN)