DESPITE the hurdles related that the pandemic established on progress, the year 2021 remains a “year of growth,” according to Insurance Commissioner Dennis B. Funa.
Citing data from interim reports for the third quarter of last year, Funa said the industry’s total net income grew by 31.04 percent year-on-year while premium income rose by 28.71 percent. Investments also grew by 14.02 percent while assets increased by 12.5 percent.
The chief of the Insurance Commission (IC) said he considers it fortunate that the industry was able to start digitalization long before the pandemic ensued.
“This year’s numbers continue to show the industry’s resilience; and, in fact, the industry was able to bounce back and even able to grow notwithstanding the adverse economic effects of the pandemic last year,” Funa told the BusinessMirror.
The regulator’s move to extend various regulatory reliefs, e.g., the extension of deadlines for filing and submission of reportorial requirements and the 50-percent reduction on penalties for non-submission of these documents, may have contributed to the industry’s better numbers.
Other measures were relaxing the admittance of receivable accounts of non-life insurers and professional reinsurers as well as directing health maintenance organizations and health insurance providers to issue certificates of employment to their employees to exempt them from home quarantine requirements.
Backlog, adjustments
FOR Sun Life of Canada (Philippines) Inc. CEO and Country Head Benedict C. Sison, the life insurance industry has adjusted well with the altered operating environment nearly two years into the pandemic.
“We are making the most of working with a hybrid-office setup, online mode of communication across the organization, digital means of distributor recruitment, training and selling, and the expanded digitalization of client interaction,” said Sison, whose term as Philippine Life Insurance Association (PLIA) president ended last December 30. “It helps that clients are now more open about online insurance-related transactions and increased trust in online dealings with agents, as well as in sharing personal information and documents electronically.”
Sison added that “in the general context, the challenges imposed by the pandemic have led to opportunities to create innovative new solutions and digital initiatives for our clients.”
However, the former PLIA president admitted that a slowdown in agent-licensing was initially a challenge for the industry since it has disrupted the in-person conduct of written qualifying exam.
“This [left] a void in the licensing of new agents whenever suspended and catch-up from the backlog takes time due to limitation in the number of allowable examinees in accordance with IATF heath protocols,” Sison told the BusinessMirror.
Eventually, this problem was addressed by the IC by launching its “online agent computerized examination,” or Online ACE, in March last year.
Advantage of tech
AS for the non-life insurance industry, Philippine Insurers and Reinsurers Association (Pira) Executive Director Michael F. Rellosa said the lockdown measures hobbled the pace of digitalization efforts as more clients adjust to online transactions.
Nonetheless, Rellosa said most companies have already digitalized their way of doing business, taking advantage of online meetings, for example.
“They’ve also developed or started developing online facilities for premium payments and, to some extent, even claims settlement,” he explained.
Rellosa added the industry also had to deal with higher costs of doing business to attenuate employee health risks and coupled with requirements for a work-from-home setup.
Nonetheless, he said while the industry suffered a hit, the losses were generally lower. He noted this is especially so for the motor-insurance sector.
Still, Rellosa and Sison expressed concern over the Omicron variant of Covid-19 that could lead to a surge in cases and prompt another round of lockdown measures. (Editor’s note: This story was crafted before the Duterte government reverted the National Capital Region to Alert Level 3 beginning January 3.)
Digitalization push
THE executives said some insurers may be unable to meet the mandated P1.3-billion minimum net-worth requirement by December 2022 under Republic Act 10607 or the Insurance Code.
But Funa said the insurance industry has the entire year to address this matter.
“As regards compliance with the minimum-net worth [requirement], it may be too early to tell at this juncture considering that insurers have the entire 2022 to prepare for compliance,” he explained. “However, it may be noted that insurers have options for business combinations such as mergers, consolidations and acquisitions for them to be able to comply with the P1.3 billion minimum net worth requirements come end of 2022.”
Rellosa said they are hoping that the IC would be more responsive and quick to act on a number of petitions they filed with the regulator.
But Sison said the PLIA is looking forward to working with the IC to significantly lift the capacity of “Online ACE” and for the regulator to ramp up its efforts to digitalize its operations.
“As with the industry players, we trust that the Insurance Commission would continue to embrace the digitalization of its operating environment, not merely as a response to the pandemic but one as a strategic choice to become more operationally efficient and responsive to its regulated entities and the public it serves,” he added.
Sison said PLIA also hopes companies would be able to boost their capacity and overcome the challenges the new year would bring.
Sustainable, suitable
MOVING forward, Funa expressed optimism the insurance industry will remain on its growth path this year.
“The outlook is generally positive. As the country’s economy is projected to grow in 2022, we anticipate that the insurance industry will likewise grow considering the industry performance trends this year,” the IC chief told the BusinessMirror last December. “Considering the pandemic experience, we believe that the industry has adapted and continue to adapt their business operating models in facing evolving financial, technological and even climate-related risk.”
Funa vowed to sustain, if not increase, the Commission’s efforts in fostering the industry’s growth through the issuance of regulatory measures. It also hopes to adapt and incorporate international developments; not only insurance technology and supervision technology.
It also aims to increase the country’s insurance penetration rate by raising public awareness of insurance protection.
“If something positive came out of the challenges brought about by the pandemic, it is the increased awareness among Filipinos of the benefits brought by having insurance protection,” Funa told the BusinessMirror. “We think that this awareness will increase in the years to come, and we will help in the insurance education aspect perhaps by organizing awareness campaigns in the following year.
He added that the insurance industry “will, likewise, have to introduce products to the market that are not only competitive and sustainable, but are suitable to the ever-changing needs of the insuring public.”