LOWER sales of life insurers pulled down the premium income of the insurance industry in the first half of 2016, regulators reported Thursday.
In a statement, the Insurance Commission (IC) said the industry’s total premium income in the first six months of the year fell 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 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,” Insurance Commissioner Emmanuel Dooc said.
He noted a significant drop in the premium production in variable life insurance products of the major players.
Despite the dip in the premium income of the industry, Dooc is optimistic that the premium income of industry players will grow by the end of the year.
“Based on past experiences, the industry performs better in terms of premium production in the second half of the year,” he said.
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.
Dooc expects the total industry net worth to dramatically improve, because of the mandatory increase in the minimum net worth requirement of insurance companies to P550 million from the current P250 million.
The Insurance Code, as amended by Republic Act No. 10607, requires an increase in the minimum net worth of all insurers to P550 million by the end of 2016.
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.
“This increase can be attributed to the significant increase in capital gains, as well as increase in the commissions earned and other miscellaneous income of some insurance companies. The same can also be attributed to the decline in underwriting expense of some companies,” Dooc said.
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.
“A higher asset base means … the insurance industry has bigger resources and in a better position to meet . . . future obligations,” Dooc said.
Total investments amounted to P1.13 trillion, up 21.51 percent from P0.93 trillion.
Dooc noted the consistent increase in total investments proves that the industry is a major force in capital market development.