The life insurance industry’s premium income rose by 5.9 percent in 2020, the Insurance Commission (IC) reported yesterday, however the adverse impact of the ongoing health crisis was also reflected on the industry’s year-end figures.
In a statement, the IC said the life insurance industry’s total premiums rose to P247.72 billion from P233.92 billion a year ago.
“Of this increase, changes to variable life insurance premiums accounted for a 7.7 percent year-on-year growth, from P170.13 billion as of end-2019 to P183.24 billion as of end-2020, with single premiums and renewal premiums both growing by 19.72 percent and 13.58 percent,” Dennis Funa, insurance commissioner, said.
On the other hand, premiums earned by traditional life policies likewise grew by 1.09 percent from P63.78 billion as of end-2019 to P64.48 billion as of end-2020, with renewal premiums increasing year-on-year by 13.72 percent.
“It has been observed by the financial sector leaders that generally the savings of the middle-class sector grew due to restraints in consumer spending because of the pandemic,” Funa said.
The industry’s aggregate paid-up capital likewise exhibited an upward trend as of end-2020, increasing by 7.66 percent from the previous year’s P23.48 billion to P25.28 billion.
The life insurance sector’s aggregate assets in 2020 amounted to P1.53 trillion, a 7.78 percent increase from the previous year’s P1.42 trillion.
The IC said this may be attributed to the growth in the industry’s total investments, both in traditional and segregated fund, by 6.72 percent year-on-year, from P1.39 trillion in 2019 to P1.48 trillion in 2020.
“Notwithstanding these positive figures, however, the negative financial impact of the coronavirus disease 2019 (COVID-19) pandemic on the life insurance industry cannot be helped,” Funa said.
For one, the aggregate benefits paid by the industry contracted by 10.06 percent, from P77.11 billion as of end-2019 to P69.36 billion in 2020.
“It is highly likely that this contraction is due to the various difficulties encountered in the processing, filing, and pay-out of claims as an effect of certain community quarantine restrictions imposed by the national government to curb the spread of COVID-19,” Funa said.
The data also shows that the life industry’s total new business annual premium equivalent (NBAPE) decreased by 19.8 percent as of end-2020, from P57.56 billion as of end-2019 to P46.16 billion.
“It is also highly likely that this decrease may be attributable to the restrictions on face-to-face selling of insurance products due to said community quarantine measures,” Funa said.
“The industry grappled with the on-and-off quarantine and lock-down measures, and the fact that we were unable to continuously offer insurance agents’ examinations greatly hampered the production of insurance companies,” he added.
A life insurer’s NBAPE is computed by obtaining the sum of the value of first year premiums from products newly sold in a specific year (or the initial annualized premium) and 10 percent of single premiums written.
“The IC is hopeful that the negative indicators will improve by the year 2021, especially with the roll-out of the vaccines towards the third and fourth quarters of the year. It will be interesting to see the impact of the shift from face-to-face selling to remote selling via videoconferencing technologies in the sale of insurance products,” Funa said.
“Also, we also hope to see the impact of the increased awareness of the importance of having life insurance as a way to provide security and peace of mind amid the threats of the COVID-19 pandemic to the lives and health of the Filipino people,” he added.
