IT is now October and during normal times, the Christmas season would have already started and the malls would be filled with Christmas trees and other decorations. Expectations are high that this year will be a lot better than 2020. The economy is improving with the combined efforts of the government and private sector. Jobs were lost but they are also being replaced. What I consider as a positive and welcome effect of the recent events is the increased awareness for protection — insurance protection. Last week's column in Insurance Insights described the growth in the life sector. The nonlife insurance industry is also performing well now as compared to the previous year. As a matter of fact, companies benchmark their performance in 2021 against the year 2019 rather than 2020 when the pandemic jolted the business sector.
Statistics gathered from the website of the Insurance Commission shows that the nonlife sector is as strong as ever. While gross premiums written decreased from P105 billion in 2019 to P98 billion in 2020, or minus 8 percent, the net income of the companies increased from P3.4 billion in 2019 to P5.6 billion in 2020, or a record 63 percent. The very good performance is attributed to fewer losses incurred and reduced management costs. The work-from-home arrangement has contributed to the reduction in the use of utilities and office spaces. Incentives to producers, such as travel and awarding ceremonies, were replaced by less expensive rewards. The nonlife sector had a P106-billion net worth as of the end of 2020, a 1:1 ratio against gross premiums! The rule of thumb is 1:1 vs net premiums. As of the end of 2020, 51 companies (out of 58) had already complied with the requirement of having a minimum net worth of P900 million. Not to worry, clients of nonlife companies! Your industry is strong and stable.
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