Expert: Steady Growth In New Life Insurance Premiums A Boon To The PH Economy

The Philippine Insurance Commission (IC) recently reported that the life insurance sector’s total premium revenues of P229.9 billion through the third quarter of 2023, with Annual Premium Equivalent (APE) premiums on new insurance sales of P46.6 billion, increased by 13.9% compared to the same period in 2022. APE is the annual total value of all single and recurring premium policies.

Growth in new life premiums comes from the sale of “good old fashioned” traditional life insurance. As sales of variable life insurance eased, owing to the volatility of equity markets the past several years, life companies have turned to traditional life sales to shore up new business.

“Acquiring life insurance coverage goes well beyond securing a family’s financial future,” said veteran insurance practitioner, Renato A. Vergel De Dios, President and CEO of BDO Life Assurance Company, Inc. (BDO Life).

Very few Filipinos are aware of how the life insurance industry participates in nation-building by virtue of its ability to pool together long-term capital that an emerging economy like the Philippines critically needs. Premiums generated, especially from traditional life insurance sales, are well poised to do exactly this.

Insurance companies help fuel economic growth by strategically channeling long-term funds generated from premiums into areas like infrastructure development and manufacturing capacity expansion, to name a few, that serve as catalysts for national development. The Asian Development Bank (ADB) has emphasized the pivotal role of such investments in sustaining economic progress.

By encouraging all Filipinos, including Overseas Filipino Workers (OFWs) deployed all over the world, to acquire life insurance coverage, insurance companies protect their earning capability and fortify family financial security. At the same time, the amounts devoted to premiums contribute to forming long-term capital funds which, when invested, spur the nation’s development and financial prosperity.

Life insurers are among the largest corporate investors in the country, given their access to long-term capital.

“We hope that our investments as an industry create ample material and local job opportunities down the road so as to help minimize the need for Filipinos to endure isolation from their loved ones in search of meaningful work abroad,” added Vergel De Dios.

Bancassurance business

With more and more Filipinos recognizing the value of life insurance protection, BDO expects bancassurance to remain a consistent, complementary contributor to its overall financial services business.

“The steady rise of life insurance sales over the years clearly indicates the growing awareness of the importance of insurance protection among Filipinos,” said Vergel De Dios. 

BDO Life, the Bank’s life insurance carrier, exhibited strong business recovery in 2022 to claim the 4th spot in new sales, measured in terms of New Business Annual Premium Equivalents (NBAPE). NBAPE is a weighted measure of premiums from new business.