THE insurance industry showed resilience in 2020 amid the disrupted operating environment that stemmed from restrictions to curb the spread of Covid-19 cases.
In the First Virtual Philippine Insurance Summit—a two-day event of industry updates and discussions on environmental issues, pandemics, innovation and disaster management—leaders from both the life insurance sector and the non-life insurance sector reported solid performances in profitability during the year.
Philippine Life Insurance Association, Inc. (PLIA) president Benedict Sison said the Philippine life insurance sector’s total premium income grew by 5.9 percent to reach P247.7 billion in 2020.
Broken down, 12 firms or 41 percent were able to contribute positively to growth while the other 17 or 59 percent were affected by the pandemic.
“The growth in total premium is partly caused by the variable life single premiums and renewals withheld from the traditional life renewals,” Sison said.
“The good performance in renewals was slightly influenced by the policyholders’ fear of losing insurance protection at the time when risks to their life and health were heightened,” Sison added.
The life insurance sector’s assets likewise grew during the period by 8 percent to hit P1.534 trillion in 2020.
“It is worth noting that despite the reduced economic activity and the decline in the value of many investment assets, the life sector still managed to pull through,” Sison said.
Meanwhile, Philippine Insurers and Reinsurers Association (PIRA) chairman Allan Santos reported in the same forum that the non-life insurance sector’s net income in 2020 grew by 67 percent from its level in 2019.
Santos said the boost in net income may be attributed to the drop in the loss ratio from 47.8 percent in 2019 to 41 percent in 2020. As a result, the sector’s profit margin increased from 6.2 percent in 2019 to 11.4 percent in 2020. The profit margin is the industry’s net income over its total premiums earned during the period.
The total net worth of the non-life insurance sector also grew 21.6 percent in 2020 to hit P105.7 billion from the P86.9 billion in the previous year.
What was largely affected in both industries, however, was the premium performance of the sector.
For the life insurance industry, new business premium dropped by 20 percent in 2020. For the non-life insurance industry, its net written premium declined by 15 percent in 2020. Pre-pandemic, this metric grew by 14 percent.
“Pandemic-induced factors led to this. Advisors were unable to go out and sell, employees could not report to the office and drive business, the inflow of new advisors was hampered and consumer spending was weakened due to the uncertainties of the time,” Sison explained.