The Insurance Commission (IC) wants to broaden the investment areas for insurance companies to include public-private partnerships (PPP) and take advantage of the Duterte administration’s infrastructure program and help sustain the performance of the insurance industry.
Insurance Commissioner Dennis B. Funa said an estimated 5 percent of investments by the insurance industry will be allocated to infrastructure this year, owing to optimistic prospects for the growth of the Philippine economy.
“At least 5 percent will be allocated to public infrastructure spending in line with the administration’s focus in developing the regions, thus, serious consideration has been given to the availability of investment opportunities in infrastructure for insurance companies,” Funa said.
To further strengthen investments by the industry, the IC sees a need to put in place a regulation governing the insurance sector in making investments in infrastructure and PPP projects.
“The IC is looking at putting in place a regulation to guide insurance companies in infrastructure and PPP investments. If we’re able to develop infra-related investment products for the insurance industry, then the industry will have viable investment vehicle alternative to stock-market equities,” he added.
He explained that due to regulations, most of the insurance industry’s assets are invested in fixed-income securities. The traditional life segment experience little effects from volatile markets, while the variable life segment is easily affected by investor sentiment and market movements.
“If the forecast on equities will be flat, the commission projects a challenging year for industry, particularly in the case of variable life insurance products,” he added.