The Insurance Commission (IC) is optimistic that the growth of the industry will recover in the third quarter of the year despite the recent weakness in financial markets.
“I am optimistic that in the third quarter, we will post modest growth because the bulk of the premium is generated by variable, which is also dependent to the performance of the economy and other factors like the peso and stock market,” Insurance Commissioner Emmanuel Dooc said at the sidelines of the Financial Literacy Program launch of Japan-based Foundation of Advancement of Life and Insurance Around the World (FALIA) and Philippine Life Insurance Association (PLIA) on Wednesday.
Even if the peso and the stock market are not performing well at present, Dooc said he is hopeful that the weakness will not last long enough to affect the industry.
“I am hopeful because per explanation of the economic managers, this weakness is driven by external forces like the strengthening of US economy and upgrade of its interest rates,” he said.
Dooc has conceded that the industry may not achieve its P280 to P300 billion target range in terms of total premiums, noting that even the lower end of the industry’s target of P280 billion is unlikely to be hit.
“The target of P280 billion is unlikely to be hit. If we compare first half even from last year, we’re a bit down,” he said.
In the first half of the year, lower sales of life insurers pulled down the premium income of the insurance industry by 9.12 percent to P105.52 billion from P116.11 billion a year earlier.
The life insurance sector posted an income of P82.20 billion, down 16.83 percent from P98.83 billion in the same comparable period. Non-life insurers recorded P19.69 billion, up 13.95 percent from in the same comparable period. Non-life insurers recorded P19.69 billion, up 13.95 percent from P17.28 billion.
“Based on the submission of the industry players, the decline in the total premium was mainly due to the lower sales performance by the life insurance sector,” Dooc earlier said.
He noted a significant drop in the premium production in variable life insurance products of the major players.
The industry net worth stood at P262.51 billion as of end-June or 40.70 percent higher than the P186.58 billion recorded in the same period in 2015, the IC reported.
On the other hand, the industry recorded total net income of P19.17 billion as of end-June, up 76.52 percent from P10.86 billion a year earlier.
Life insurers posted a 68.73 percent increase in net income to 15.27 billion from P9.05 billion.
The non-life sector posted an increase of 18.23 percent year-on-year at P2.14 billion from P1.81 billion. The commission noted the industry’s total assets grew by 20.56 percent.
As of June 30, the industry’s asset base totaled P1.29 trillion from P1.07 trillion a year earlier.
Total investments amounted to P1.13 trillion, up 21.51 percent from P0.93 trillion.