The Philippine life insurance industry’s net written premiums (NWP) are forecasted to grow at a 5.4% compound annual growth rate (CAGR) over the next five years to hit PHP395bn (US$7.1bn) by 2028, according to data and analytics firm GlobalData.
Based on GlobalData’s Insurance Database, the Philippines’ life insurance segment is expected to log an annual growth rate of 3% in 2024, driven by the country’s economic recovery, along with the demographic trend of an ageing population with a longer life expectancy.
According to projections from GlobalData, the share of the population 65 years of age and older will rise from 5.4% in 2023 to 6.1% in 2028, resulting in an increase in demand for different life insurance and pension products.
Life insurance products that are foreign currency-denominated, specifically products in US dollars, have become more popular among Filipinos because of the potential appreciation of the currency, as well as higher interest rates compared to peso-denominated investments.
Prasanth Katam, Insurance Analyst with GlobalData, explained that “Insurers in the Philippines have responded to this demand by introducing investment-linked life insurance policies denominated in US dollars, providing customers with the opportunity to invest in foreign currency while enjoying insurance benefits.”
Katam also mentioned that the growth in GDP in the country is “driven by robust consumer spending, a strong labour market, and a recovery in tourism and financial services activities.” Katam adds that Philippines’ GDP is expected to go up by 6.1% and 6.3% in 2024 and 2025 respectively, which will also support growth in the life insurance sector.
According to GlobalData, the life insurance sector’s growth in the Philippines may also be driven by favourable regulatory developments and support from the government.
The country is considering easing regulations that impact Overseas Filipino Workers (OFWs) who are considered a major customer segment for insurers. At the moment, OFWs are required by the government to be physically present in the Philippines if they want to purchase life insurance products from local insurers, which limits their access to financial protection. GlobalData suggests that making this more accessible to OFWs will incentivise these potential consumers to save and send more money to the country, which ultimately contributes to stimulating growth in the life sector.
Katam also mentioned that “Digital transformation is also propelling the expansion of the life insurance industry in the Philippines. Insurers are investing heavily in technology to streamline operations, enhance customer experience, and improve policy distribution.”
In the last five years, the life sector in the Philippines has seen significant innovation and initiatives that target promoting insurance penetration. Insurers have embraced and pushed for the use of Artificial Intelligence (AI) and data analytics in offering policies that are customised based on specific customer needs.
The move from using a product-centric approach to a customer-centric one has become possible due to the availability of digital insurance products and the convenient access to purchasing them using digital platforms.
