Annual Seminar on Regulatory Issues for Senior Officers of Insurance Regulatory Agencies Venue:...
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Transcript of Annual Seminar on Regulatory Issues for Senior Officers of Insurance Regulatory Agencies Venue:...
Annual Seminar onAnnual Seminar onRegulatory Issues for Regulatory Issues for
Senior Officers of Insurance Senior Officers of Insurance Regulatory AgenciesRegulatory Agencies
Venue: Hotel ITC Kakatiya Sheraton, Venue: Hotel ITC Kakatiya Sheraton, Hyderabad, IndiaHyderabad, India
Date: 14th - 16th November 2005Date: 14th - 16th November 2005
COUNTRY PRESENTATION FOR COUNTRY PRESENTATION FOR THE PHILIPPINESTHE PHILIPPINES
Mr. Antonio E. EnanoMr. Antonio E. EnanoSupervising Insurance SpecialistSupervising Insurance Specialist
Rating Division, Insurance CommissionRating Division, Insurance Commission IC Bldg., 1071 UN Avenue, Manila, IC Bldg., 1071 UN Avenue, Manila,
PhilippinesPhilippines
Republic of the Philippines
A. BASIC DATA
National Name : Republika ng Pilipinas
Capital City : 2003 est.-- Manila, 13,790,900 (metro. area), 10,232,900 (city proper)
Land Area : 115,830 sq mi (300,000 sq km) Archipelago comprising 7,107 islands
Population : 2005-- 85.2 million - (growth rate: 1.8%); birth rate: 25.3/1000; infant mortality rate: 23.5/1000; life expectancy: 69.9; density per sq mi: 759
President : Gloria Macapagal Arroyo First term (2001- 2004); Elected in 2004 for a 6-yr. term no reelection
Monetary unit : Peso Convertion: $ 1 = P 54.69 ( Nov. 11, 2005)Languages : Filipino (based on Tagalog), English (both official); eight major dialects: Tagalog, Cebuano, Ilocano, Hiligaynon or Ilonggo, Bicol, Waray, Pampango, and Pangasinense Ethnicity/Race : Christian Malay 91.5%, Muslim Malay 4%, Chinese 1.5%, other 3% Religion : Roman Catholic 83%, Protestant 9%, Islam 5%, Buddhist and other 3%
Literacy rate : 92.3% (2000)
Economic Summary : GDP/Constant ’85 prices (2004 ) PESOS 318,560 million
Real Growth Rate : 5.9%
Inflation : 7.0%.(Sept. 2005)
Labor force : 35.86 million; agriculture 36%, industry 16%, services 48% (2004 est.). Unemployment : 7.7%.(April 2005)
Arable land : 19%. Agriculture: sugarcane, coconuts, rice, corn, bananas, cassavas, pineapples, fish, mangoes, pork, eggs, beef
NATIONAL INCOMENATIONAL INCOME
(in million pesos)(in million pesos)
(Source: NSCB) (Source: NSCB)
GrowthGrowth
RatesRates
2004 2004
4th Qtr 4th Qtr 2004 2004
4th Qtr 4th Qtr 2003 2003
At Current Prices At Current Prices
Gross National ProductGross National Product 11.411.4 1,484,8091,484,809 1,315,0481,315,048
Gross Domestic ProductGross Domestic Product 11.511.5 1,389,8171,389,817 1,232,1281,232,128
At Constant Prices (1985 prices)At Constant Prices (1985 prices)
Gross National ProductGross National Product 6.26.2 342,537342,537 324,727324,727
Gross Domestic ProductGross Domestic Product 6.16.1 318,560318,560 302,308302,308
NATIONAL INCOME (in million)NATIONAL INCOME (in million)
0
200000
400000
600000
800000
1000000
1200000
1400000
1600000
2003 2004
GNP-Cur.
GDP-Cur.
GNP-Fixed
GDP-Fixed
NATIONAL INCOME (% g.r.) NATIONAL INCOME (% g.r.) (Source:NSCB)(Source:NSCB)
FYFY
2004 2004 FYFY
2003 2003 FYFY
2002 2002
G N P (constant ’85) G N P (constant ’85) 6.2 6.2 5.5 5.5 4.5 4.5
G D P G D P 6.1 6.1 4.5 4.5 4.4 4.4
Net Factor Income from Net Factor Income from Abroad Abroad
8.5 8.5 18.9 18.9 5.1 5.1
NATIONAL INCOME NATIONAL INCOME
0
2
4
6
8
10
12
14
16
18
20
GNP-con. GDP NET FACT
2002
2003
2004
(% growth)
By Industrial OriginBy Industrial Origin FYFY
2004 2004 FYFY
2003 2003 FYFY
2002 2002
AgricultureAgriculture 5.1 5.1 3.9 3.9 3.3 3.3
IndustryIndustry 5.2 5.2 3.0 3.0 3.7 3.7
ServicesServices 7.1 7.1 5.9 5.9 5.4 5.4
National Income
0
1
2
3
4
5
6
7
8
2002 2003 2004
Agriculture
Industry
Services
By Expenditure SharesBy Expenditure Shares FYFY
2004 2004 FYFY
2003 2003 FYFY
2002 2002
Personal Consumption Personal Consumption Exp.Exp.
5.8 5.8 5.1 5.1 4.1 4.1
Government Government ConsumptionConsumption
0.33 0.33 -2.8 -2.8 2.4 2.4
Capital FormationCapital Formation 9.5 9.5 4.8 4.8 -3.5 -3.5
ExportsExports 14.1 14.1 3.3 3.3 3.6 3.6
Imports Imports 5.9 5.9 10.3 10.3 4.7 4.7
-4
-202468
10121416
2002 2003 2004
Per. Cons
Govt Cons
Capital
Exports
Imports
•Agricultural production 5.1 growth rate from 3.9 with gov’t. infrastructure, financial and technical support.
•Industry and services rose at 5.2 and 7.1 percent respectively, with support from domestic and foreign demand.
•Consumer spending strong due to the growth in rural incomes.
•Money remittances from overseas foreign workers grew 11 % and bolstered spending.
•Exports of goods and services expanded at 14 percent.
•Tourist arrivals 23.6 percent and reached 1.8 million in 2004. •Call center 35,000 seats in 2004 employing 56,000 agents from 20,000 seats in 2003
•Government supported micro, small and medium enterprises.
Areas of Economic Growth in 2004
Areas of Concern -
•Fiscal position, although still weak, is improving. The 2004 national government fiscal deficit ended at P 186.1 billion.
•Unemployment shall be reduced to generate 10 million jobs the next 6 years.
•Low Foreign Investment - The government is also addressing the key bottlenecks to investment in the Philippines
•Lastly, the government is keen on addressing the problem of corruption
In Million PesosIn Million Pesos GrowthGrowth FYFY
20042004FYFY
20032003
A. LifeA. Life 3 %3 % 41,413.1041,413.10 40,207.8040,207.80
B. Non-LifeB. Non-Life 3 %3 % 28,654.7428,654.74 27,793.8927,793.89
Total Total 3 %3 % 70,067.8470,067.84 68,001.6968,001.69
Combined life and non-life premium
INSURANCE INDUSTRY in 2004
COMBINED LIFE & NON-LIFE PREMIUMCOMBINED LIFE & NON-LIFE PREMIUM
0.00
5,000.00
10,000.00
15,000.00
20,000.00
25,000.00
30,000.00
35,000.00
40,000.00
45,000.00
2003 2004
Life
Non-Life
Non-Life - Gross PremiumNon-Life - Gross Premium
Class – in million PesosClass – in million Pesos% Growth% Growth 20042004 20032003
Fire & Allied PerilsFire & Allied Perils 2.402.40 11,054.48 11,054.48 10,795.04 10,795.04
Marine & AviationMarine & Aviation 2.06 2.06 3,441.95 3,441.95 3,372.53 3,372.53
MotorMotor 2.632.63 7,897.31 7,897.31 7,694.58 7,694.58
OthersOthers 5.555.55 6,261.00 6,261.00 5,931.74 5,931.74
TotalTotal 3.103.10 28,654.7428,654.74 27,793.8927,793.89
0
2,000
4,000
6,000
8,000
10,000
12,000
2003 2004
Fire/Allied Perils
Marine/Aviation
Motor
Others
Gross Premium – Non-Life
Non-Life – NET PREMIUMNon-Life – NET PREMIUM
Class – in million PesosClass – in million Pesos % % GROWTHGROWTH 20042004 20032003
Fire & Allied PerilsFire & Allied Perils 8.788.78 4,911.544,911.54 4,514.864,514.86
Marine & AviationMarine & Aviation 1.061.06 1,613.251,613.25 1,596.341,596.34
MotorMotor 4.304.30 7,458.087,458.08 7,150.807,150.80
OthersOthers 11.3511.35 4,121.634,121.63 3,701.453,701.45
TotalTotal 6.736.73 18,104.5018,104.50 16,963.5516,963.55
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
2003 2004
Fire/Allied Perils
Marine/Aviation
Motor
Others
Net Premium – Non-Life
Non-Life - Net Incurred ClaimsNon-Life - Net Incurred Claims
Class – in million PesosClass – in million Pesos Loss RatioLoss Ratio 20042004 20032003
Fire & Allied PerilsFire & Allied Perils 46.4446.44 1,522.751,522.75 1,197.521,197.52
Marine & AviationMarine & Aviation 36.00 36.00 515.41515.41 423.78423.78
MotorMotor 105.81105.81 7,149.037,149.03 3,928.55 3,928.55
OthersOthers 42.8242.82 1,287.321,287.32 1,129.971,129.97
TotalTotal 72.37 72.37 10,474.5110,474.51 6,679.826,679.82
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
2003 2004
Fire/Allied Perils
Marine/Aviation
Motor Car
Ohers
Net Incurred Claims – Non-Life
(In-Million Pesos)
Net Income – Non-LifeThese sectors experienced:
Income(in million pesos)
%Increase
2004 2003
Underwriting gain /(loss)
4.15 4,849.4 4.656.0
Investment Income 5.67 1,999.7 1,895.4
Operating expenses - 01.03 4,787.4 4,837.2
Income Taxes 20.27 2,061.7 1,714.2
Net Income 22.22 1,867.4 1,527.8
0
1000
2000
2003
2003
2004
Net Income – Non-Life (In Million Pesos)
Net worth – Non Life The financial structure of the non-life sector revealed:
In Million Pesos % Increase 2004 2003
Assets 1.83 65,554.0 64,373.1
Liabilities - 1.77 30,952.80 31,502.60
Net worth 5.26 34,601.2 32,870.5
0.00
10,000.00
20,000.00
30,000.00
40,000.00
50,000.00
60,000.00
70,000.00
2004 2003
Assets
Liabilities
Networth
Net Worth – Non-Life
Life Premium(in million pesos)
% growth
2004% dis.
2004 2003% dis.
2003
Ordinary 1.69 86.73 35,916.4 87.84 35,320.4
Group 1.25 13.27 5,496.7 12.16 4,887.4
Total 2.99 100 41,413.1 100 40,207.8
Life Premiums – In Million Pesos
LIFE PREMIUMLIFE PREMIUM(in millions)(in millions)
0.00
5,000.00
10,000.00
15,000.00
20,000.00
25,000.00
30,000.00
35,000.00
40,000.00
2003 2004
Ordinary
Group
2004 Life Premium Distribution
86.73%
13.27%Ordinary Life
Group Life
Kind of Payment Amount Percent distribution
Death benefits 3,985.3 20.85
Surrenders 4,146.5 21.70
Policy Dividends 3,969.9 20.77
Matured policies 2,662.1 13.93
Supplementary Contract 2,292.8 12.00
Others 2,053.0 10.7
Total 19,109.6 100.00
Life Sector – Benefits
Life Sector – Benefits Life Sector – Benefits
Death21%
Surrender21%
P. Dividend21%
Matured14%
Sup. Con.12%
Others11%
Death
Surrender
P. Dividend
Matured
Sup. Con.
Others
Net Income – Life Sector These sectors experienced:
Income(in million pesos)
%Increase
2004 2003
Underwriting 308.9 (2,064.2) (504.7)
Investment 17.08 18,651.0 15,929.6
Operating expenses -4.51 9,552.5 9,983.2
Net Income b/ tax 29.25 7,034.3 5,441.7
Income Taxes paid 9.59 (93.7) (85.5)
Net Income 29.5 6,940.6 5,356.2
0.00
1,000.00
2,000.00
3,000.00
4,000.00
5,000.00
6,000.00
7,000.00
Net Income2003 2004
NET INCOME – Life Sector
Net worth- Life Sector The financial structure of the life sector revealed:
In Million Pesos % Increase 2004 2003
Assets 15.2 240,042.7 208,366.4
Liabilities 20.9 182,805.50 151,180.4
Net worth 0.08 57,237.2 57,186.0
0
50,000
100,000
150,000
200,000
250,000
2003 2004
Assets
Liabilities
Net Worth
Net Worth - Life Sector
C. PROFESSIONAL REINSURERS’ SECTOR Reinsurance Premiums Written
The reinsurance sector comprising of two (2)domestic professional reinsurers accounted forP 2,603.0 million in premium volume for 2004, a slight decrease in comparison with the P 2,612.3 million in 2003, with three (3).
However, this sector wroteP 214.1 million premium on business accepted from overseas which was lower than the 2003 premium of P 253.6.
2598
2600
2602
2604
2606
2608
2610
2612
2614
2004 2003
Premium
Reinsurance Sector – Premium Income
Net Income – Reinsurance These sectors experienced:
Income(in million pesos)
%Increase
2004 2003
Underwriting 153.5 129.5
Investment 250.2 224.2
Operating expenses 214.5 183.9
Net Income b/tax 189.2 169.4
Income Taxes paid 0.6 14.2
Net Income a/tax 21.52 188.6 155.2
0
50
100
150
200
2003 Incr. 2004
2003Incr.
2004
Reinsurance – Net Income
D. The Philippine Market Structure
Here is a chart of the Philippine Market Structure for the last two year 2003 and 2004. We are
fortunate to include herein incomplete data for 2005 because licensing of insurance companies
and intermediaries are done on July 1 of every year.
2005 2004 2003
Number of Licenced Companies 128 137 141
Composite 3 4 4
Domestic 3 3 3
Foreign (locally incorporated) - 1 1
Life 29 34 32
Domestic 24 22
Foreign (locally incorporated) 9 10
(Branch Operation) 1
Non-Life 94 97 102
Domestic 87 91
Foreign (locally incorporated) 5 6
(Branch Operation) 5 5
Professional Reinsurers – Doms. 2 2 3
Sales Agencies and
Technical Services2004 2003
Ordinary Agents 40,762 33,121
General Agents 619 403
Variable Life Agents 857 650
Insurance Brokers 127 127
Reinsurance Brokers 43 43
Public Adjusters 2 2
Independent Adjusters 59 59
Accredited Actuaries 45 42
Resident Agents 62 65
Non-Life Company Underwriters 527 534
E. Government’s Supervision of Insurance
Office Name: Insurance Commission IC Bldg., 1071 UN Avenue
Ermita, Manila
Insurance Commissioner- Ms. Evangeline C. Escobillo
Telephone- 063 2 523-84-61 to 70e-mail- [email protected]
F. CONCLUSION
The Philippine insurance industry continues to thrive despite adverse factors affecting the Philippine economy, to mention a few are:
1-Volume of premiums is a function of economic activity.Government’s fiscal problem slowdowns industry’s resultsaffecting insurance needs. 2-Philippines lies in Pacific rim of fire, hence susceptible to volcanic eruptions and earthquakes limiting retention capacity of insurers.
3-The industry feels they are over-taxed, hence there is always the clamor for legislated reduction of existingtaxes or do away with double taxation on premiumsand insurance business corporations. 4-In the light of globalization and competition, insuranceclients may be forced to get coverage in foreign lands, especially marine covers.
5-Although the budget costs of supervision gets higherevery year, the quantity and quality of output are affected because of low salaries of employees in the government sector.
Thank you everybody for your Thank you everybody for your wonderful attention.wonderful attention.
Melbourne Zoo -2004