THE local insurance industry’s total premium income slipped in the first six months of 2020 as the pandemic-induced economic recession hits all sectors, data from the Insurance Commission (IC) showed.
The IC reported total premiums generated by the industry fell by 4.2% to P136.097 billion as of end-June from the P142 billion earned in the same period last year, based on the unaudited quarterly financial reports submitted by life and nonlife insurance firms and mutual benefit associations (MBAs).
The IC extended the deadline for submission of the financial reports until Aug. 31 in light of the disruptions caused by the coronavirus disease 2019 (COVID-19) pandemic.
The regulator said in a statement on Monday that net premiums written by nonlife insurers dropped by 18% to P22.662 billion at the end of June from P27.6 billion the year before, reporting the largest year-on-year decline across three sectors.
“This decline was brought about by the decrease in almost all lines of business, except for aviation which showed an increase of 314.81%. It can be presumed that this general decline may be attributed to the decrease in the general public’s capacity to pay premiums due to the adverse effects of the COVID-19 pandemic, as the second quarter of 2020 marked the pinnacle of the strict imposition of community quarantine guidelines by the National Government,” said Insurance Commissioner Dennis B. Funa.
The government placed Metro Manila and other COVID-19 hotspots in the country under a strict lockdown from mid-March to May to slow down the spread of the virus, which brought the economy to a near standstill.
The life insurance sector’s overall premium income also inched down by 0.41% year on year to P107.98 billion.
“This was brought about by the decrease in traditional life premiums by 5.35% or P1.67 billion compared with the same quarter of the previous year. The single and first-year premiums for traditional life insurance posted a decrease of 62.43% and 9.80%, while the renewal premiums increased by 2.17%,” said Mr. Funa
Meanwhile, MBAs reported their premiums were also down by 4.1% to P136 billion from P141.9 billion a year ago.
The entire insurance industry booked P19 billion in net income, down 17% from P22.8 billion last year.
The drag was from the net earnings of life insurers, which fell 20% to P14.3 billion, tempered by the 82% surge in the net income of the nonlife sector to P3.53 billion.
Meanwhile, the whole industry’s total assets went up by 6.79% to P1.412 trillion as of end-June from P1.322 trillion in the comparable period last year.
Life insurers saw their assets grow by 1.95% year on year to P1.41 trillion during the period; nonlife reported a 14% growth to P275 billion; while MBAs saw their assets increase by 13% to P107 billion.
Total investments of the entire industry edged up by 2.31% to P1.558 trillion at the end of June from P1.523 trillion the prior year.
The country’s insurance density, the amount of premiums per capita, went down by 4.54% to P1,255 in the first half from the P1,315 in the same period last year.
Insurance penetration or the overall contribution of the insurance sector to the economy also shrank to 1.58% from 1.67% a year ago.
MICROINSURANCE COVERAGE EXPANDS Despite the lower premiums by the entire insurance industry, the microinsurance sector was ableto cover more people in those six months, separate data from the IC showed.
Citing unaudited reports from companies, the IC said in a press statement on Monday that the estimated insured lives by the microinsurance sector rose by 7.86% year on year to 39.67 million in the first six months of 2020. This meant an additional 2.89 million individuals were covered during the period.
Mr. Funa said the total still posted growth despite the decline in the number of lives insured by the nonlife sector, which fell by 25% to 3.79 million year on year.
“The statistics are indicative that it was the nonlife insurance sector that was greatly affected by the implementation of strict community quarantine measures brought about by the COVID-19 pandemic,” he said.
Life insurance firms also covered more individuals with their microinsurance products, with the tally rising by 8.77% to cover 8.44 million people.
The regulator said MBAs reported the largest market share in terms of number of lives insured by microinsurance, with 27.43 million lives insured as of end-June or 69% of the total. By: Beatrice M.Laforga (BusinessWorld)