The Philippines’ insurance coverage trade has remained resilient and upbeat in latest instances, driving on the nation’s evolving financial system
Author: Leticia C Tendero, Director of Investor Relations, Standard Insurance
February 13, 2020
After steadily increasing over plenty of years, the Philippine insurance coverage trade is set to scale new heights, pushed ahead by technological innovation. The trade has remained resilient and upbeat in latest instances, driving on the nation’s evolving financial system. Though it faces myriad challenges, the outlook for the Philippine insurance coverage trade stays optimistic.
The Philippines’ Insurance Commission reported a rise in the nation’s per capita insurance coverage density of 16 p.c from 2017 to 2018 – a price of PHP 2,054 ($40) for every Filipino with insurance coverage.
These numbers point out a rising demand for insurance coverage cowl in the nation. More than 60 million Filipinos had some type of insurance coverage protection by the conclusion of 2018, in contrast with simply 48 million in 2017. More importantly, the incontrovertible fact that the trade’s insurance coverage penetration charge stays low signifies that there is nonetheless a lot alternative for additional progress.
The Insurance Commission continues to push for digitalisation and additional innovation by encouraging a greater buyer expertise with extra related merchandise, thus growing its ranges of insurance coverage penetration. Until not too long ago, the trade has been generally known as a standard market, with most people preferring the added consolation of a face-to-face assembly with an insurance coverage middleman. However, with the evolving market panorama intensifying as the results of a rising variety of technology-savvy younger clients, the trade is being challenged to innovate. Increasingly, there is strain to create merchandise that cater to youthful clients by utilising on-line platforms as promotional channels for services.
Standard Insurance continues to concentrate on correct underwriting, clever pricing throughout all traces and excessive ranges of sustainability, in addition to quick and correct resolutions to claims
Insurance firms have turned to insurance coverage technological know-how (insurtech) as one other option to higher serve its progressing market. Self-service dashboards, chatbots, SMS updates, the digitalisation of some components of the claims course of, and insurance coverage comparability instruments to information clients to the finest deal have all emerged in latest years. In reality, to encourage the use of insurtech, the Insurance Commission has issued a coverage assertion allowing insurance coverage firms, topic to obligatory safety necessities, to promote plans utilizing apps on cell phones, in addition to to supply versatile fee frameworks in lieu of the ordinary fee strategies.
Playing by the guidelines
The progress of the Philippine non-life insurance coverage sector has not been with out its challenges. The Tax Reform for Acceleration and Inclusion resulted in dismal gross sales for brand spanking new motorcars in 2018, exacerbated by financial headwinds reminiscent of a weakening peso and rising inflation. New automotive gross sales for 2018 plummeted by as a lot as 16 p.c, all the way down to a complete of simply 357,410 new items bought, in contrast with 2017 gross sales of 425,673. As a consequence, motorized vehicle loans have slowed down, recording a paltry 9.four p.c progress charge in contrast with 2017’s 21.6 p.c. These situations have understandably additionally had a knock-on impact on automotive insurance coverage charges.
Although motorcar sellers and monetary establishments are main sources of insurance coverage enterprise, the trade as a complete – particularly, the non-life insurance coverage sector – nonetheless managed to generate over PHP 89.04bn ($1.7bn) in gross premiums in 2018. This determine was six p.c greater than the earlier 12 months, with the prime 10 non-life insurance coverage firms accounting for 63 p.c of stated 2018 gross premiums.
Furthermore, the Philippine insurance coverage trade is confronted with two main regulatory developments: progressive will increase in risk-based and minimal web price necessities, and the forthcoming introduction of the new international insurance coverage accounting requirements, the IFRS 17. Based on the Insurance Commission’s record of insurance coverage firms with legitimate and present Certificates of Authority as of August 9, 2019, the variety of insurance coverage firms has decreased by 13 since 2013. Further contractions, mergers and consolidations are anticipated to be accomplished by year-end 2019, as a number of insurance coverage firms are prone to stay considerably under the mandated PHP 900m ($17.8m) web price degree by this time.
Aggravating the state of affairs is the forthcoming implementation of the IFRS 17, which necessitates the implementation of recent programs that change how information is collected, analysed and processed. The International Accounting Standards Board accredited the effectiveness of IFRS 17 for 2021 however subsequently proposed a delay till 2022. The implementation was then additional delayed to January 1, 2023, with the Insurance Commission recognising plenty of challenges to its implementation.
Nonetheless, all these measures are envisioned to additional strengthen trade gamers and make them extra aggressive when dealing with their counterparts at the Association of South-East Asian Nations, whereas additionally aligning themselves with international insurance coverage accounting requirements.
Staking a declare
While insurance coverage technological know-how and different improvements are altering the trade nearly imperceptibly, Standard Insurance has invested in a various vary of abilities, views and approaches over latest years, and continues to take action right this moment. This has allowed us to create and develop progressive merchandise and new applied sciences, and keep our relevance, even when confronted with transformative market shifts.
Standard Insurance continues to concentrate on correct underwriting, clever pricing throughout all traces and excessive ranges of sustainability, in addition to quick and correct resolutions to claims. Equally necessary, Standard Insurance has been deploying progressive merchandise and new applied sciences whereas enhancing efficiencies in vital areas of operations to maximise gross sales potential and distribution networks.
Since 2009, Standard Insurance has been creating and sustaining a proprietary common insurance coverage IT system referred to as iINSURE, the core of which was designed elegant on a system inherited from Zurich Insurance Group following its acquisition in the early 2000s. Contemporary, versatile and affordably constructed in home, iINSURE permits Standard Insurance to satisfy present and future buyer wants.
Standard Insurance is proud to be an all-digital enterprise, and its underwriting instruments (reminiscent of the Web-Catastrophe Risk Management System), real-time claims analysis system (iCATS) and telematics merchandise, together with many different options, are all potential due to iINSURE. All subsystems that assist the vital areas of Standard Insurance’s operations are powered and linked to iINSURE.
Risk and reward
As insurers, danger administration is embedded in our nature. As such, a evaluation of the firm’s present programs structure was undertaken in 2016, which resulted in the eventual transition to utilizing the cloud as an information centre. The previous few years have seen the firm exploring additional methods of making technological options to its enterprise wants, growing the tempo of innovation and dramatically enhancing its already strong cybersecurity infrastructure.
Standard Insurance is good ready and resilient on the subject of the challenges dealing with the trade, together with the influence of recent laws
A collaboration with cloud companies agency Cato Networks, formalised in early 2017, was used to attach our 60 branches nationwide, linking the head workplace and the firm’s cloud infrastructure as a single software-defined broad space community. Firewalls, intrusion prevention programs and cybersecurity guidelines are actually centralised in the cloud, offering larger operational stability.
In early 2018, iINSURE, iCATS and all associated apps had been migrated to the cloud, making Standard Insurance the first insurance coverage firm to take action. Amazon Web Services was employed to satisfy the firm’s high quality, reliability, pace and redundancy necessities.
Complementing the agency’s present motorcar analytics, Standard Insurance has tailored instruments like synthetic intelligence and information science to allow a extra in-depth evaluation of its information units. This has helped us to raised perceive the peculiar dangers and traits associated to totally different car sorts and markets, to estimate our anticipated losses, and to enhance churn charges. This method serves as the basis for clever motorcar methods and pricing, improved buyer companies and the creation of progressive merchandise that higher tackle the wants of the evolving insurance coverage inhabitants.
To develop advertising capabilities that complement our conventional gross sales platform, now we have ventured into on-line gross sales, which permits clients to purchase non-public automotive and journey insurance coverage shortly and simply utilizing our on-line danger assessments. Our digital gross sales platform has not too long ago expanded to incorporate social media as a device for conversational advertising.
As customers flip to Facebook and Google to seek out solutions about insurance coverage, Standard Insurance is prepared to offer them. Initially this includes creating social media posts that construct company consciousness, adopted by different related posts that search to coach the market on the significance of insurance coverage. Finally, we create brand-building posts that talk the 4 pillars of Standard Insurance: innovation, empathy, service and excellence. In 2019, after eight months of standard calibration, the firm efficiently bought 1,200 insurance policies with a media price range of lower than 10 p.c of the premium, proving that Standard Insurance is greater than able to develop social media promoting as its subsequent main distribution channel.
Standard Insurance is good ready and resilient on the subject of the challenges dealing with the trade, together with the influence of recent laws, underpinned by the firm’s sturdy monetary place and well-developed insurance coverage infrastructure. The firm has been in a position to develop its complete premiums enterprise, regardless of the dismal motorcar gross sales of 2018, off the again of its increasing department community and powerful enterprise relationships with intermediaries. Likewise, the enterprise is good ready for progressive will increase in risk-based and minimal web price necessities, and welcomes the implementation of recent international accounting requirements.
As at all times, Standard Insurance continues to maximise the effectiveness of progressive options to resolve the challenges at hand – whether or not they relate to producing premiums, shopper servicing or programs assist. While our newest efforts in creating synthetic intelligence and our use of information science have been geared in the direction of enhancing operations, the firm’s strategic ambition is to develop into an exponential organisation – one which is in a position to submit disproportionately massive progress in comparison with its friends in the medium time period. If we proceed to hear, reply to our clients’ wants and push ahead with progressive options, we hope to realize this goal.