The Philippines Insurance industry delivered a mediocre performance in 2008 as the global financial crisis of that year impacted practically on all sectors of the global economy, including the Philippines.
Statistical data from the Insurance Commission and industry sources disclosed that the greater effect took its toll on the life-insurance sector while the non-life sector achieved a minuscule growth. As 2007 was somewhat of a banner year for the insurance industry, the results of 2008 in comparison was a great letdown.
Total premiums generated in 2008 by 32 life-insurance companies reached Peso 56.89 billion, compared with the Peso (P) 76.21 billion achieved in 2007, a steep decline of 25.35 percent. However, an analysis reveals that the primary cause for this unprecedented performance was the sudden drop in premiums attributable to investment-linked products (variable policies or life-insurance protection combined with investments in various financial instruments). The sales volume of this special product decreased from a high of P34.34 billion in 2007 to only P14.52 billion in 2008, which represented a sharp decline of 57.72 percent. On the other hand, the traditional life-insurance policies with guaranteed benefits improved slightly by 1.19 percent from P41.87 billion in 2007 to P42.37 billion in the current year.
On the financials, the assets of the life sector rose slightly by 1.62 percent from P366.88 billion in 2007 to P372.834 billion in 2008. However, liabilities increased by 7.39 percent from P293.880 billion in 2007 to P316.520 billion the following year. While paid-up capital of the life-insurance sector increased by 5.46 percent from P9.140 billion in 2007 to P9.639 billion in 2008, there was a surprising reduction in net worth of 21.57 percent from P73.077 billion to P57.314 billion.
In conclusion, it was not a good year for the life-insurance sector but in the current year of 2009, despite the economic uncertainty, unofficial figures for the first semester from a number of life insurers shows a favorable trend with sales of traditional products rising to appreciable levels.
The non-life sector of the insurance industry registered in 2008 an unimpressive growth in real terms. Gross premiums rose by 31.10 percent from P28.728 billion in 2007 to P37.665 billion, but earned premiums improved by only 13.85 percent from P18.007 billion to P20.501 billion. This disparity may be due to lower retentions of the non-life insurers in insuring the proliferation of high-valued risks which requires conservative underwriting decisions and the greater dependence on the reinsurance facilities of major overseas markets.
SIGMA of Swiss Re reported that, likewise, global non-life premiums fell by 0.8 percent in 2008, resulting in a total premium volume of $1.780 billion. The decline was felt most in the American markets and in all the industrialized regions. However, in comparison, growth was solid in the newly industrialized Asian economies.
The financial results of the non-life sector does not merit an accolade as assets increased by a mere 0.74 percent from P88.021 billion in 2007 to P88.675 in 2008 while liabilities climbed by 11.29 percent from P42.366 billion to P47.178 billion. Thus, additional funds were brought in as paid-up capital increased by 8.34 percent from P13.357 billion to P14.471 billion but nevertheless, net worth dropped by 9.04 percent from P45.651 billion in 2007 to P41.527 billion in the following year.