Philippine non-life insurance sector sees ‘excellent growth’
World Finance examines what factors might facilitate or inhibit the growth of the Philippine’s non-life insurance sector, which is said to be experiencing ‘very strong economic growth’
The Philippine non-life insurance sector has seen a compound annual growth rate of 15.7 percent. One organisation at the forefront of innovation in the sector is Standard Insurance Company. World Finance speaks to its President and CEO, Patricia Echauz Chilip, to find out more.
World Finance: Patricia, the local non-life insurance sector is expected to continue to grow, but what is likely to impact its development?
Patricia Echauz Chilip: Well as you said, we’ve had excellent growth through the last couple of years; some very strong economic growth.
In terms of the non-life insurance industry, we’re seeing a lot of regulatory requirements. One of them is the increasing capitalisation.
In 2013 your capital as an insurance company – as a non-life insurance company – had to be at PEP 215m; and by 2022 it has to be at PEP 1.3bn. Every few years they increase the capitalisation requirement, and we’ve seen insurance industry players for non-life shrink from 107 players, to 87 players, now we’re at 64 players. And we see further consolidation.
[W]e’ve had excellent growth through the last couple of years; some very strong economic growth
Right now our tax rates are at 12 percent VAT and 12.5 percent for DST. Because of this it’s a little bit pricey for consumers to have non-life insurance: their car insurance, their home insurance. We’re hoping that we’ll be able to lower this. We’ve already tried to pass a bill in congress, and we’re hoping it does well for our industry.
The life insurance industry was successful in lowering their tax rates and their growth rate has been amazing, so we hope to follow suit.
World Finance: Now, the growing automobile sector over there is one of the real driving forces behind the non-life insurance industry. How have you been capitalising on this?
Patricia Echauz Chilip: Just today’s paper said that the automobile industry here has reached a 29.6 percent growth rate compared to last year. We’ve sold 250,000 units in the Philippines year to date, and next year they expect to hit 300,000. So, we have a lot more cars than we do road! But it’s been very good for us. Especially for Standard Insurance, as we are the leader in automobile insurance in our country.
World Finance: Now you were talking earlier about the consolidation you were expecting to see; it’s always been a very competitive market over there, so how has Standard Insurance been staying ahead of the game?
Patricia Echauz Chilip: Well, we’ve been consistent in our strategy, and we call our strategy ‘STAND’.
S is for Speedy claim service, which, as you know in our country we have a lot of catastrophes. So speedy claim service is very important.
We have a Trusted and knowledgeable salesforce, and they’ve been around for years. They, I think, are one of our strongest factors in keeping our clients comfortable.
We’re also Accessible through many distribution channels. We’re online, we sell through dealers, we have a multitude of agents. And so you’re able to buy our insurance in very many ways.
We also love New thinking; innovation. And that’s been amazing in keeping our costs lower, in keeping us efficient.
And then at the end of the day, Disciplined underwriting. It keeps our portfolios safe, and keeps us sustainable.
World Finance: So, what are your latest innovations?
Patricia Echauz Chilip: Recently we have our online client management portal. You can manage your policy online, we send you renewals so that you never miss or expire policy. We send any update on your claims online. So it’ll really help our clients manage their policies and coverage better.
Another thing we have is Emergency Protect. That is a new feature we give for free to all of our motorcar insurance clients. When you are in an accident, we’ll give you free ambulance cover, so, we’ll take you to the hospital whether you’re here in the Philippines or anywhere in the world.
Well, the beauty of the non-life insurance sector in the country, hopefully, is that it’s really growing at a rapid rate
It’s consistent with our strategy of being there when you need us the most. So we don’t only take care of your car; we also take care of you.
We’ve also launched this year a large facility in the south wherein we study a lot of repair costs, we study claims; to further reduce our costs and make it easier for customers to buy our insurance.
World Finance: Now of course the Philippines is plagued by extreme weather conditions, so having a very good catastrophe response must be very important for you.
Patricia Echauz Chilip: It is; we have a very large manpower complement at 900 people. Of which 250 people are claims and technical people. We’re able to send right away a contingent down there to check not only on their cars, but of course on our clients.
It’s very important to be there on the ground, sort of hold their hand through all of it, when things like that hit.
I mean I think in Haiyan we had 900 motorcar claims. And we were able to adjust those right away. But more importantly we were able to show support to our customers.
The government’s doing it best to rehabilitate these disaster-hit areas, but for us in the insurance industry we fortified our manpower complement in some of these areas so that we’re sure to respond quickly in a disaster.
So for a nation, we’re just helping each other get through these disasters.
World Finance: Finally, what do you see as the key trends and opportunities in the non-life insurance sector moving forward?
Patricia Echauz Chilip: Well, the beauty of the non-life insurance sector in the country, hopefully, is that it’s really growing at a rapid rate.
If we’re able to make it more affordable for customers then we will be able to make the insurance penetration rate better in our country. And I think it’s good for the consumer overall.
The insurance sector is bound to grow, as it does for any growing economy. There’s no question of awareness; every so often you have a typhoon, and it makes you aware that you need to protect all your assets, as well as the future of your family. So it bodes well for the insurance industry here in the Philippines.