Page 44 - Digital Edition SIRC Supplement

MARKET REPORT – PHILIPPINES

Competitive market still
attracting new players

Amid regional developments, the Philippines has received attention for its
economic growth in recent years – which the insurance industry has also benefited
from. Mr Augusto Hidalgo, President & CEO, National Reinsurance Corporation
of the Philippines, provides an overview of the industry; drivers of and challenges
to this growth; regulatory changes and the role of reinsurance; and the future of
the market.

As of May 2015, the Philippine insurance industry has 2016. In addition, remittances from Filipinos working abroad
67 general insurers, 27 life insurance companies, remain strong, comprising over 8.5% of GDP in 2014 or $26.9
and 4 corporations licensed to issue both life and billion, a 6.2% increase from 2013.
non-life insurance.
This contributed to increased turnover in certain lines of
The top three general insurers in terms of net premiums business. The total premium income for the life sector was
written for 2014 were Prudential Guarantee and Assurance, approximately $2.2 billion compared to about $1.5 billion
Malayan Insurance Company and BPI/MS Insurance. In terms for the same period in 2014. Motor car insurance, which
of net income, the top three were BPI/MS Insurance, Malayan comprised 28.33% of gross premiums in 2013 and 27.5% of
Insurance Company, and Federal Phoenix Assurance Co. gross premiums in 2014, grew from $378.8 million in 2013 to
$405.3 million in 2014.
The top three life insurance companies based on premium
income for 2014 were Sun Life of Canada (Philippines), Furthermore, driven by demand for offices, retail space,
Philippine AXA Life Insurance, and Philippine American and housing, the construction industry grew to $25.6 billion
Life and General Insurance. Based on net income, the top in 2014, a 16.3% increase from the previous year. Fire and
three companies were Philippine American Life and General allied perils insurance – 36.79% of gross premiums written for
Insurance, Insular Life Assurance, and Philippine AXA Life non-life insurance in 2014 and 34.73% for 2013 – increased to
Insurance. $542.1 million in 2014 compared to $464.4 million in 2013.
1H2015 results Surety bonds increased from $49.6 million in 2013 to $69.1
From 1 January to 30 June million in 2014.
2015, the net premiums Challenges
written in the non-life sector While there are reasons to be optimistic about the Philippine
totalled around US$388.4 insurance industry, some risks must be taken into account.
million compared to $351.4
million for the same period The Philippines remains prone to natural disasters, having
in 2014. Losses incurred experienced several catastrophes over the past few years,
amounted to $158.2 million including Typhoon Rammasun/Glenda in 2014 (around $868
versus $133 million. Net million worth of damage), Haiyan/Yolanda in 2013 ($2.1
income was $40.7 million billion worth of damage) and Bopha/Pablo in 2012 ($943.7
compared to $29 million. million worth of damage). Moreover, because of its location
in the Pacific Ring of Fire, concerns about the Philippines’
The life sector’s total vulnerability to earthquakes, volcanic eruptions and tsunamis
premium income was have been raised: for example, the Philippine Institute of
approximately $2.2 billion Volcanology and Seismology has estimated that a 7.2 magnitude
for first half of 2015; over the earthquake could cause over $54 billion of damage.
same period last year, it was
$1.5 billion. Benefits paid The political situation could change within the next few
amounted to $671.4 million and $608.8 million. Net income
was $203.3 million, versus $154.9 million.

Finally, the sole licensed reinsurer, the National Reinsurance
Corporation of the Philippines (NRCP), had around $23 million
of net retained premiums in 2014 compared to $19.3 million in
2013. Access to other reinsurers in regional hubs such as Hong
Kong and Singapore is available through 21 licensed brokers.
Drivers of growth
The insurance industry has benefited from the Philippine
economy’s improvement over the past few years, which was
fueled by private consumption that accounted for more than
60% of the GDP in 2014.

The country’s BPO industry employed over 1 million
employees in 2014, with this figure expected to grow to 1.2
million this year. Its revenue increased to $18 billion in 2014,
and is projected to rise to $21 billion in 2015 and $25 billion in

42 SIRC Supplement • November 2015 • www.asiainsurancereview.com Back to Contents