Life insurers in the Philippines are cautiously optimistic about the industry’s growth prospects this year despite the elevated inflation that may affect the economy’s ongoing recovery.
“While we take comfort in a retained economic growth forecast for next year at 5% by the IMF (International Monetary Fund), despite expected global downturn, the industry will have to contend with continuing cost of living challenges brought on by rising inflation,” said Rico T. Bautista, president and CEO of Etiqa Philippines and the Philippine Life Insurance Association, Inc. (PLIA) President.
He added that acquiring life insurance coverage may remain a low priority for consumers due to the cost of living.
Mr. Bautista also acknowledged that educating the market about the importance of life insurance is still a challenge. However, digital platforms like apps and digital assistants have helped improve access to information about insurance products and expand distribution channels. He believes that insurers need to think carefully about the channels that can bring the most value in growing their business.
Moreover, life insurers are optimistic about the industry’s growth as the economy continues to recover from the impact of the COVID-19 pandemic. Despite the challenges, Mr. Bautista said that more insurers are looking to cater to specific needs and offer customer-focused products like health insurance for growth.
Mr. Bautista is optimistic that the industry performed well in the fourth quarter of 2022, with a gross domestic product growth of 7.2% expected to have contributed to a rebound in variable single premium sales despite elevated inflation. He believes that the industry’s last quarter of the year is usually a strong one that could result in modest full-year growth.
According to Insurance Commission data, the life insurance sector’s total premiums decreased to P229.38 billion at the end of September 2022 from P230.61 billion in the same period last year, mainly due to the 6.48% decline in variable life premiums to P167.04 billion. The industry’s net income also dropped by 12.67% to P26.1 billion in the same period.