Brokers are indispensable partners of insurance companies. They bring business in a very competitive market. Brokers do not work for insurance companies (referred to as providers), they represent the insured’s interests. So an insurance broker knocking at an insurer’s door is always heaven sent. The business they bring to an insurance company can be significant. Most particularly for non-life insurers. The rewards of a repeat business can never be underappreciated. In addition to related services such as handling claims for the insured, several brokers also provide other added services such as advisory or consultancy services for its corporate clients.
The country has about 63 insurance brokerage companies. They also broker for HMOs. Looking at the 2018 business, the total premium production of both life and non-life insurers and HMOs amounted to P323.05 billion (It was P287.38 billion in 2017). The insurance and reinsurance brokers brought in P71.64 billion of this figure as direct premiums. This means that about 22.17 percent of the total premiums were coursed through brokers. About one-fourth of all insurance business was made through brokers. A very significant portion.
Brokers’ business continues to rise. The P71.64 billion 2018 brokers’ business was 19.22 percent higher that than of 2017’s P60.09 billion brokers’ business.
The 2018 increase in brokers’ insurance (excluding reinsurance) business can be attributed to increases in health insurance (15.96 percent), life (27.83 percent), motor vehicle (14.07 percent), and fire insurance (15.55 percent). These four insurance products comprised 79.46 percent of the total premiums produced. A high 94.72 percent of the total brokers’ premiums were generated by insurance brokers while 5.28 percent were generated by reinsurance brokers.
In terms of business lines, for the insurance brokers, health insurance brought in the biggest business with 26.98 percent of the total insurance premiums or about P18.314 billion in premiums. This shows that health insurance is a priority amongst corporate employers. Second is fire insurance with 25.88 percent of the total insurance premiums or about P17.569 billion in premiums. Third is life insurance with 16.38 percent of total premiums or about P11.11 billion in premiums. Fourth is motor vehicle insurance with 10.20 percent of total insurance premiums or about P6.92 billion in premiums. Other lines such as ocean marine, inland marine, marine hull, aviation, fidelity and surety, engineering, accident, and others accounted for 21.70 percent of the total premiums.
For the reinsurance brokers, miscellaneous reinsurance business brought in 40.52 percent of the total premiums or about P1.533 billion. The fire reinsurance business brought in 28.89 percent or about P1.092 billion.
Commissions of insurance and reinsurance brokers reached a hefty P8.33 billion in 2018. This increased by 11.51 percent from P7.477 billion from the previous year. Typical commissions range from between 2 percent to 8 percent of premiums. As of end of 2018, commissions of insurance brokers were mainly from the non-life insurance business in the amount of P6.17 billion, which represents 84.21 percent of the total commissions earned.
The 10 largest insurance brokers, as of 2017, were BDO Insurance Brokers Inc., Marsh Philippines Inc., AON Insurance and Reinsurance Brokers Philippines Inc., HSBC Insurance Brokers (Phils.) Inc., Jardine Lloyd Thompson Insurance Brokers Inc., Lockton Philippines Insurance and Reinsurance Brokers Inc., Anchor Insurance Brokers Corp., Gotuaco, Del Rosario Insurance Brokers Inc., Unicon Insurance Brokers Corp. and Intertrade Insurance Brokers. The combined premiums of these brokers composed 75 percent of the total brokers’ premiums for 2017.