Source : Insurance Commission
The Insurance Commission has released its report on the performance of life insurance companies as to New Premiums. The list includes First year premiums or FYP plus all Single Pay Premiums. FYP indicates the amount of new life insurance sold for a particular year and life insurance companies make sure that there is a steady flow of new business coming in their books to ensure their viability, market share and ultimately, profitability.
The Insurance Commission reports combined all new premiums, FYP & Single Pay into one report. Single pay premium are life insurance policies that require no further payment of premiums and are already fully paid. Customarily, many companies report single pay premiums only at 10% in their books and I believe the Insurance Commission should do so as well.
You will notice that 11 out of the top 15 companies sell a lot of Variable Insurance, this are insurance policies that have investment funds attached to it. Bulk of the premiums being brought in the form of variable insurance. In principle, variable insurance premiums are largely investment funds and in the strictest sense, not really insurance premiums… but let’s leave that with the Insurance Commission. Some refer to variable insurance as Unit-Linked or VUL. Further, insurance companies with Bank partners under a Bancassurance arrangement are getting a big pie of the share of premiums. In fact, a substantial amount of new premiums being generated for the past couple of years are coming from Bancassurance and through the sale of variable insurance.
Some tidbits that might be interesting enough to mention. Sun Life shows impressive performance even without a Bancassurance partner although they have recently bought half of Grepalife so one can be assured that their numbers will change next year. Insular Life is the only purely Filipino company in the top 5 category. Prulife is registering phenomenal growth in the new business arena largely through the sale of variable insurance. Philamlife’s agency operations tries to remain strong and continues to perform despite challenges. Generali Pilipinas, despite having a strong banking partner, BDO slips in the new business race with their decision to discontinue selling single pay premiums.
With the obvious growth of Bancassurance, what is the future of tied-agencies (exclusive agents of companies)? Seems there must be some re-learning, re-training and re-engineering that needs to be done for tied agencies if they are to survive the onslaught of changes. Personally, I believe the role of tied-agencies is very critical to the sustainable growth of the life insurance industry — agents can do better financial planning and can maintain stronger relationship with clients so I’m really rooting for them. But, both Bancassurance and tied-agency system can work together and provide financial security for Filipinos.
Off hand, I think the life insurance industry is doing a good job of providing financial security to Filipinos, such a herculean task. My only concern is scale — reports shows that way below 1/5th of the family heads of the country has some form of insurance. Growth in premiums may not necessarily mean more people are being insured. Any growth in new lives being insured is dwarfed by the increase in population.
My dream for this institution, and to all the other financial institution is this : sell less, and educate more — and the business will just flow.
My 2 cents.
The 2010 Top Life Insurance in total Premiums are here http://www.randelltiongson.com/top-life-insurance-of-2010-my-thoughts/