RP life insurance companies assure they will survive crisis
abs-cbnNEWS.com | 10/14/2008 9:48 PM
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An industry association of Philippine-based life insurance companies expressed confidence that all their members would be able to survive the global financial crisis.
Victor Quisumbing, vice president of the Philippine Life Insurance Association (PLIA), said Tuesday that "it is business as usual" for all their 33 members.
"The life insurance industry is not in crisis," Quisumbing said.
This assurance comes at the heels of a US government's bailout of American International Group (AIG), once the world's largest insurer. AIG's liquidity crisis after a unit engaged in subprime-related deals that went sour resulted in putting subsidiaries like Philippine American Life and General Insurance Co. (Philamlife) on the auction block.
Philamlife is the Philippine's largest and the undisputed market leader in the life insurance sector.
The group, however, noted that AIG and Philamlife were able to act quickly to address the concerns of the insuring public.
Henry Joseph Herrera, PLIA director and Sun Life of Canada (Philippines) Inc. president and chief executive officer, said local insurance companies are financially sound.
"We (insurance companies) have very prudent investment guidelines. In my 30 years in the industry not single insurance company has gone under but some banks have gone under," Herrera said.
Low penetration rate
What concerns the industry more is the insurance products's low penetration rate in the Philippines.
Quisumbing noted that only 11 percent of the total Philippine population are covered by insurance. Of these, life insurance coverage of individuals accounts for only 4 percent, while group insurance accounts for only 7 percent.
Former PLIA president Peter Coyiuto attributed this to the country's low per capital income.
Coyiuto, currently president and chief executive officer of First Guarantee Life Assurance Company Inc., cited data from National Statistical Coordination Board, which showed that the Philippines' per capita GDP--the value of the country's domestic output divided by the population--stood at $1,742 in 2007.
It pales in comparison with Singapore's more than $20,000 per capita GDP, Malaysia's $5,000-plus, and Thailand's $3,000-plus.
"Insurance is always last on the list of expenditures while food, beer, and cigarettes are high on the list," Coyiuto noted.
