Newly appointed Insurance commissioner Dennis Funa said yesterday the industry stands to benefit from the increasing number of middle-income Filipinos and the expanding local economy.
“Due to the increase in confidence in the current Duterte administration, purchasing power and the middle class, the Philippine economy is expected to continue its expansion. This would benefit the different industries, translate into a considerable amount of potential to the insurance industry and would address the challenges brought about by the ASEAN integration,” Funa said in a statement.
Funa said the expanding insurance penetration and density in the Philippines would also fuel the growth of local insurance firms.
Data from the IC showed that insurance density – the average amount spent on insurance by each individual in the country – jumped 84.1 percent to P2,286 in 2015.
Insurance penetration – the ratio of insurance premium to GDP – likewise improved from 1.02 percent in 2011 to 1.75 percent in 2015.
The market penetration rate – the ratio of individuals with life insurance coverage to population – also increased from 18.29 percent to 41.27 percent.
However, the IC noted that insurance density and penetration in the country continued to lag behind its ASEAN neighbors.
Funa said the regulator would implement reforms and enhancements to address this challenge.
The IC earlier implemented the mandatory increase in the minimum capitalization requirement of insurance firms from P250 million to P550 million, a move that is expected to improve public confidence in insurance companies.
Funa earlier disclosed that 41 companies had already complied with the required capital increase, while others were still in the process of complying via mergers and acquisitions.
Four insurance firms, on the other hand, have chosen to voluntarily exit the industry.
“Despite the decrease in the number of insurance companies in view of the implementation of the higher capitalization requirements, we remain optimistic the industry will continue its growth. Considering that the industry is well-capitalized, we expect that there will be an increase in market penetration owing to the increase in confidence on the industry,” Funa said.
In line with the increase in capital, Funa emphasized the need for a regulation to facilitate investments by insurance firms, particularly for infrastructure and public-private partnership projects.
“In relation to the capitalization of insurance companies, we must consider the availability of investment opportunities for the industry. The IC and the industry are expecting that more investment instruments or products will become available to the industry to improve its revenue from investments,” he said.
Funa said the IC would also implement new financial regulatory requirements on financial reporting, risk-based capital and valuation standards for policy reserves.
Meanwhile, Funa cited the need for new regulations to keep up with the evolution of the different distribution channels of insurance companies.
“In the recent past, the industry has witnessed the emergence of bancassurance and electronic commerce that contributed to the increase in insurance market penetration. However, we likewise recognize that there is need for an enhanced regulation on the sale of insurance products online or through the internet or through mobile applications,” he said.
