London-based data and analytics company GlobalData projects a promising future for the P&C insurance industry in the Philippines. The sector is anticipated to achieve a compound annual growth rate (CAGR) of 11.6%, reaching PHP211.5 bn (US$3.7 bn) in gross written premiums (GWP) by 2027, up from PHP136.4 bn in 2023.
This projected growth stems from several factors, including the country’s overall strong economic expansion, the ongoing construction of infrastructure projects, and a rising demand for natural catastrophic insurance coverage.
“Sustained economic growth along with the rapid growth in the construction and automobile sectors presents a positive outlook for the general insurance sector over the next five years,” said Manogna Vangari, insurance analyst at GlobalData.
The thriving Philippine economy is expected to benefit key sectors such as automobiles, construction, real estate, travel, and tourism, as well as export and import activities, which will contribute to the expansion of the general insurance market. GlobalData forecasts the country’s real GDP growth to reach approximately 5.5% in 2023 and 5.6% in 2024.
The sectors driving growth
Leading the growth trajectory within the sector is property insurance, accounting for a significant 36.8% share of the GWP in 2023.
“It is forecast to grow by 15.9% in 2023, supported by the increasing demand for nat-cat insurance policies as the Philippines is prone to typhoons and earthquakes,” said Vangari.
Motor insurance holds the second-largest share in the general insurance market, accounting for 24.3% of premiums in 2023. With a CAGR of 11.2% expected between 2023 and 2027, the growth of this segment will be supported by the government’s initiative to promote electric vehicles, including a zero-tariff rate on fully electric vehicle models until 2028.
Electric vehicle distributors in the Philippines anticipate a substantial 30% increase in EV sales in 2023, further boosting the demand for motor insurance.
Additionally, marine, aviation, and transit (MAT) insurance is estimated to account for a 5% share of premiums in 2023, projected to grow at a CAGR of 6.3% from 2023 to 2027. This expansion is driven by increased export and import activities, demonstrating the significance of international trade for the insurance sector.
Nat-cat events
GlobalData highlights that the Philippines faces significant economic losses from nat-cat events caused by climate change.
Over the next 50 years, the country is projected to experience total losses of PHP1.5 trillion.
Recent incidents, such as floods, storms, and landslides in early 2023, resulting in extensive property destruction, underline the importance of comprehensive insurance coverage.
“To provide financial security to public infrastructure, the government is planning to implement an insurance plan as well national indemnity insurance plan,” the London-based firm says.
