THE country’s non-life insurance companies are expected to accelerate developing their digital infrastructure and product offerings as the industry continues to adjust to the “new normal” arising from Covid-19 pandemic, according to insurance credit ratings agency AM Best Co.
Myles Gould, head of the firm’s analytics for Southeast Asia, Australia and New Zealand, said insurers are already responding to Insurance Commission’s move to widen the scope of remote selling by insurance companies in the Philippines, regardless of the amount of premium payable on the policy sold.
“It supports the remote selling for a range of products that previously couldn’t be transacted in this way, including SME [small and medium-scale enterprises], and commercial type products,” Gould said during the first “Virtual Philippine Insurance Summit” on July 22. “So these changes are expected to be here to stay.”
“As a result, we expect insurers to respond and we are seeing this already, to developing both new and refining existing products to fit more neatly with a digital-based sales environment,” Gould said during the last day of the two-day summit on industry updates and discussions on environmental issues, pandemics, innovation and disaster management.
Moreover, Gould said they also expect product innovation and market campaigns via digital mediums to grow.
AM Best also said all these developments are seen to present opportunities for competitive advantage and cost efficiencies.
The increased use of digitalization to support sales and policy administration is also projected to “grow the scope, the reach and efficiency of insurance companies over time,” Gould added. “AM Best views digitalization and innovation, more generally, as a key differentiator and competitive tool for insurance companies in the Philippines over the medium term.”
In March this year, AM Best assigned a “stable” outlook to the Philippines non-life insurance sector.
Apart from increased use of digitalization in retail sales and policy administration, the ratings agency said the country’s solid growth prospects in the long term supported by an increasing trend in GDP per capita bode well for the non-life insurance industry.
It also viewed positively the rising minimum net worth requirements as it expects it to lead to consolidation and strengthened industry capital position.
On the other hand, AM Best identified the headwinds for the local non-life insurance sector, which includes the country’s significant exposure to natural catastrophe risks, the near-term economic slowdown and operational disruption from Covid-19 pandemic and the “fierce market competition” in the sector, “with soft pricing conditions for fire insurance pressuring underwriting results.”