THE PHILIPPINE industry could hit its full growth potential once the country achieves upper middle-income status, an industry player said.
“We already reached $3,000 per capita in the 2010’s, when the insurance industry saw rapid growth,” SunLife Grepa Financial, Inc. Director Rizalina G. Mantaring reporters on Friday. “SunLife grew 42% in new business premiums a year during that period, including bancassurance. It really needs a certain level of prosperity because there’s not enough disposable income.”
“People don’t tend to think of insurance because of low financial literacy. They look for their immediate needs first. Then if there are leftovers, maybe they’ll think of insurance,” she added.
The Marcos administration aims for the Philippines to achieve upper middle-income status by 2025, or a gross national income (GNI) per capita of $4,466 to $13,845.
The World Bank classifies the Philippines as a lower middle-income country with a GNI per capita of $3,950.
The Philippines has been classified as a lower middle-income country since 1987, which is the earliest available data from the World Bank.
The industry’s penetration rate could reach 5-6% of gross domestic product once the country reaches upper middle-income status or meets the GDP per capita requirement, similar to other economies in the region, Ms. Mantaring said.
“Once you reach that, it will definitely grow because if you look at advanced economies, their penetration is at 10% with respect to their GDP,” she said. “Even our ASEAN (Association of Southeast Asian Nations) neighbors are higher at 4-5%. We used to be much higher than them.”
As of the third quarter last year, insurance penetration or premium volume as a share of GDP — the contribution of the insurance sector to the national economy — was at 1.68%, down from 1.81% a year ago
Ms. Mantaring noted that the insurance industry is still growing, and the economy is growing faster.
She added that insurers need to continue pushing their digital transformation and financial literacy campaigns so they can boost insurance penetration.
“We were coming from a really low base [in the early 2010’s] before insurers began these financial literacy campaigns and introduced business solutions. The growth was rapid,” she said. – Aaron Michael C. Sy