Philippines: Life market to spurt ahead this year

Philippines: Life market to spurt ahead this year
The Philippine life insurance sector expects to grow significantly this year, citing positive economic indicators suggesting an increase in demand for insurance products.

Mr Mayo Jose Ongsingco, President of the Philippine Life Insurance Association (PLIA), says: "In 2010, our first-year premiums grew by 59%, while total premiums grew by 23%. We expect that the growth this year will be close to that." PLIA data show that the industry's total premium income increased by 23.5% to PHP70.7 billion (US$1.7 billion) while first-year premiums rose by 59.4% to PHP34.28 billion last year.

"The economic fundamentals of the country are very strong. Inflation is in check, the fiscal deficit is under control. Despite all the troubles in the Middle East and North Africa, remittances are also strong," he points out. With favourable economic conditions, people have more personal disposable income to purchase insurance, he says.

The debt crises in the United States and Europe have also boosted the Philippine insurance industry by pushing capital to emerging markets. These have buoyed bond and equity markets, increasing insurers' yields on investments. However, Mr Ongsingco also warns that a US default would send ripples to markets across the globe, similar to the global financial crisis in 2008.

Currently, the penetration rate of insurance is still small in the Philippines, Mr Ongsingco says. At present, insurance premiums collected by the industry are equivalent to just 0.75% of the country's gross domestic product. He says that the ratio could substantially increase through the promotion of micro insurance.