The Philippines’ non-life insurance sector is expected to grow in the coming years, thanks to the country’s positive macroeconomic indicators and digitalisation, which could lead to better insurance penetration in an economy that has always lagged in this metric.
Credit ratings agency AM Best has given the Philippines’ non-life insurance sector a stable outlook, citing robust growth prospects, expanding reinsurance capacity, and solid investment returns as key positive factors supporting the sector. This came as gross premiums written in the non-life segment grew by 10% in 2024, reaching PHP140bn ($2.4bn).
The
Asia Insurance Review spoke to Oona Insurance Group CEO Abhishek Bhatia and Philippine Insurers and Reinsurers Association Executive Director Michael Rellosa, who both expressed optimism about the outlook for the Philippine non-life sector, citing the growing economy and digitalisation.
Mr Bhatia said the Philippines’ capital income “is now around $4,000, and once countries cross the $5,000-mark, insurance adoption tends to accelerate.” His comments came on the heels of the Philippines missing classification by the World Bank as an upper middle-income country, having fallen short by $26 in its gross national income per capita.
His comments also came amid positive macroeconomic indicators for Manila, with its inflation for July hitting a six-year low of 0.9% and recording a 5.4% growth in Gross Domestic Product (GDP) at the start of the year, a figure a touch above what was recorded by end-2024.
Echoing Mr Bhatia’s remark, Mr Rellosa said in a mix of Filipino and English: “The first quarter performance of the sector was good, with impressive gains. This momentum is attributed to increased economic activity; if there’s more trade, there are more assets to protect, and more assets used as collateral.”
Risks from natural disasters
Mr Rellosa, however, noted that while the prospects are rosy, risks from natural catastrophes remain. “If you look at how we’re doing, we’re still okay – unless we have another ‘Ondoy,’ or the West Valley Fault moves. Now, they’re not just talking about the West Valley Fault; they’re also talking about the Manila Trench,” he said.
For context, Typhoon Ondoy (international name: Ketsana) was a deadly storm that hit the Philippines in 2009, causing widespread flooding and economic losses estimated by the World Bank at $4.38bn. Meanwhile, the West Valley Fault is an approximately 100-kilometre fault line running through major Philippine cities, including those in the capital, Metro Manila. A recent study by the country’s state volcanology and seismology institute found that a magnitude 7.2 earthquake along the fault could lead to the destruction of nearly 170,000 buildings.
The country is vulnerable to natural disasters due to its geographical location, situated in the Pacific Ring of Fire and the Pacific Typhoon Belt, making it susceptible to powerful earthquakes and typhoons.
Mr Bhatia has the same sentiments as Mr Rellosa, saying: “Climate risk continues to grow, with typhoons and flooding putting pressure on insurers’ ability to price accurately and stay resilient. At Oona, we have strengthened our reinsurance arrangements and are closely monitoring exposure trends to ensure we stay resilient as climate risks evolve.”
Digitalisation as the way forward
According to government data, around 99% of businesses in the Philippines are classified as micro, small, and medium Enterprises (MSMEs). This suggests that the purchasing power of many Filipino businesses remains limited. Cultural factors may also play a role, as Mr Rellosa pointed out, with some businesses not prioritising or setting aside funds for insurance.
According to Mr Rellosa, to make insurance affordable for an MSME-heavy business sector, insurance companies can tap fintech platforms and AI. “Fintech platforms are no longer just e-wallets; they have become distribution channels for insurance. They help reduce labour costs, which could be a solution for insurance companies to reach those who need protection with products they can afford,” he said.
“A job that was usually done in two weeks by an employee will be done in seconds by AI… in underwriting, it’s the same thing. There are site risk tools like HazardHunter of the DOST (Department of Science and Technology); it can come up with a report detailing that in the past 100 years, these are the places that have been flooded, you are x kilometres away from the nearest volcano, it gives you a very comprehensive report. Then the insurance company can come up with a rate for your house almost immediately,” Mr Rellosa added.
Mr Bhatia has similar observations on digitalisation. He said: “We are seeing strong momentum in embedded insurance, as more Filipinos engage with digital wallets, credit services, travel apps and e-commerce platforms.
These partnerships allow us to offer bite-sized coverage at the point of need, often just a few taps away. That’s how we’re reaching younger and underserved segments, who may not walk into a traditional branch but are happy to buy a PHP300 travel plan or PHP500 health cover if it’s offered seamlessly within their digital journey.”
However, for Mr Bhatia, digitalisation is both an opportunity and a risk. “Cyber threats are also escalating as more insurers go digital. We see this as both a risk and a responsibility, which is why we’ve implemented secure, tech-enabled processes to reduce fraud, speed up claims, and protect customer data,” he said.
A local news report, citing data from global information solutions provider TransUnion, said that the Philippines recorded a suspected digital fraud rate of 13.4% last year, significantly higher than the global average of 5.4%.
Mr Bhatia also noted that there are risks arising from complacency and falling behind in tech. He calls on the industry to “move faster on digital onboarding, support for embedded insurance, and enabling agent productivity.”
He also sees digitalisation as a way to improve Philippine insurance penetration, which has been lagging compared to its peers. “Most Filipinos still don’t actively seek out insurance, but they do use everyday apps like e-wallets, e-commerce and ride-hailing. That’s why embedding insurance into everyday platforms is so powerful as it removes friction, lowers cost, and drives adoption.”
Per data from the Philippine Insurance Commission, insurance penetration in the country rose to 1.89% in the first quarter of the year from 1.78% in the same quarter last year, with density going up by 13.40% from PHP965.56 to PHP1,094.9 per capita. A