The Philippine Insurers and Reinsurers Association (PIRA) said that the non-life insurance industry is ‘expected to rebound and grow along with the Philippine economy in 2021’. The Philippine economy is expected to grow by about 6.5 to 7.5 per cent this year, a reversal of the projected 8.5- to 9.5-per-cent contraction in 2020, according to a report by The Philippine Star.
In particular, PIRA said a rebound in the construction sector – from a projected contraction of 10 per cent in 2020 to an estimated growth of 9.5 per cent this year – could lead to higher demand for property and engineering insurance. Moreover, non-life insurers are banking on the public’s improved awareness of the need for protection against unforeseen events.
Public awareness about insurance increased
“The events in 2020, such as the Covid-19 pandemic, the Taal volcano eruption, Typhoons Ulysses and Rolly have also increased the public’s awareness and the importance of insurance protection,” PIRA said.
Last year, non-life insurers suffered from a decline in sales due to activity lockdowns to slow the spread of Covid-19. They also saw lower income due to the pandemic-induced volatility in the financial markets in 2020. While PIRA remains upbeat about the industry’s growth opportunities this year, the association says that failure to control the spread of the Covid-19 virus could derail the recovery of the economy and the insurance industry.
“The non-life insurance industry is expected to remain strong given the insurance companies’ high risk-based capital ratios, although we could see some consolidation due to the industry’s increased minimum capital requirements,” PIRA added.