LIFE INSURERS are optimistic but remain guarded about the industry’s growth prospects this year as the economy’s ongoing recovery could be stunted by elevated inflation.
“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,” Philippine Life Insurance Association, Inc. (PLIA) President Rico T. Bautista, who is the president and chief executive officer of Etiqa Philippines, said in an e-mail to BusinessWorld last month.
“Acquiring life insurance coverage, regrettably, would likely remain below priority in the consumer wallet share,” he added.
Philippine headline inflation eased slightly to 8.6% in February from the 14-year high 8.7% in January.
For the first two months, headline inflation averaged 8.6%. The central bank expects inflation to average 6.1% this year.
Educating the market on the importance of life insurance continues to be a challenge, Mr. Bautista said.
“Building awareness on the value of life insurance is slowly but surely getting through the Filipino consumer through the digital approaches being utilized by insurers,” he said.
The official said apps and digital assistants are bringing insurers closer to potential customers and improving access to information about insurance products.
Digital platforms also expand distribution channels and improve the appeal of insurance to younger customers.
“Each company should carefully think on what is the channel that will bring most value in growing their business,” he said.
Mr. Bautista added that more insurers are looking to bank on customer-focused products that cater to specific needs, as well as health insurance products, for growth.
“The guiding principles are to enable offering a superior value-for-money proposition to the customer and a rewarding customer service experience,” he said.
Despite lingering challenges, Mr. Bautista said life insurers are optimistic about the industry’s growth as the economy continues to recover from impact of the coronavirus pandemic
“Funds that were previously kept for emergency purposes may already be freed up and targeted to cover life insurance purchase,” he said.
Mr. Bautista added that he is optimistic the industry performed well in the fourth quarter of 2022, with the gross domestic product growth of 7.2% in the period expected to have contributed to a rebound in variable single premium sales despite elevated inflation.
“Variable life premium generation generally mirrors economic performance, which gives us comfort in anticipating a fourth-quarter turnaround amid the prevailing challenges,” Mr. Bautista said.
“The last quarter of the year is usually a strong one that allows the industry a final push that could overturn the 0.53% decline as of the third quarter and result in modest full-year growth,” he added.
The life insurance sector’s total premiums slipped to PHP 229.38 billion at end-September 2022 from PHP 230.61 billion in the same period the year prior, Insurance Commission data showed. This was mainly due to the 6.48% decline in variable life premiums to PHP 167.04 billion.
The industry’s net income also dropped by 12.67% to PHP 26.1 billion in the same period. — A.M.C. Sy
This article originally appeared on bworldonline.com