The Philippines life insurance industry is expected to grow 10% in 2009 due to additional manpower, innovative products and most importantly low penetration rate.
The Philippine Life Insurance Association (PLIA) has expressed confidence that the insurance industry will post modest growth in the current year although the business environment is not conducive due to volatile financial markets and slow economic growth, as reported by
Inquirer.
The Philippines life insurance industry is expected to perform better this year with 10% growth against 7% growth in 2008, said industry leaders. The life insurance penetration level in the country is still very low at 0.91%, while the insurance penetration ratio has been recorded in the range of 11-14%. This 14% ratio includes the social insurance provided by Social Security System and Government Service Insurance System. Moreover, the baking industry accounts for more than 90% of the total assets in the country's financial system whereas the insurance industry represents merely 5-6% share against 30-40% in other nations.
The insurance industry is expected to be driven by additional manpower (agents), new ventures and innovative products. The current trend in the insurance industry reflects that people are turning to traditional insurance products.
The Philippines has one of the lowest per capita expenditure for insurance in the ASEAN region, representing the inherent strength and resilient nature of the country's insurance industry. The PLIA stated, "We will see a market that is changing at this point, when investments are more aggressive for everybody."
However, according to experts, a lot more is to be done to educate Filipinos about the significance of purchasing life insurance products as the penetration of life insurance is very low in the country. Officials also added that the penetration level in the Philippines, which is presently one of the lowest in the ASEAN, should atleast be at par with the other ASEAN countries.
According to a Research Analyst at
RNCOS, "The wide gap between the total population and insured population shows the government's indifferent attitude towards the development of other non-bank financial services such as brokerages, insurance companies, investment houses and pre-need firms. This is not a good sign for the healthy growth of the economy. Further, taxes should be removed from premiums on life insurance which will benefit the entire life insurance sector."
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