Insurers warn of higher premiums

Worsening climate conditions and external uncertainties could prompt insurers to hike premiums, an industry group said on Wednesday.

Philippine Insurers and Reinsurers Association Executive Director Michael Rellosa told reporters that "massive events" such as natural disasters, geopolitical tensions and other economic uncertainties could pose risks to insurers, prompting them to hike premiums — the amount that clients pay regularly to keep a policy in force.

"The Philippines is also now the most vulnerable country to natural calamities ... we've had that dubious title for three years in a row," he noted.

The recent wildfires in California, for example, were said to have led to insurers hiking premiums or refusing to renew policies.

Jose de Vera, nonlife head at National Reinsurance Corp. of the Philippines, said that an "accumulation" of events and the possible impact on the Philippines would be contributing factors in decisions to adjust premiums.

As for reinsurers — firms that provide financial protection to insurers — Malayan Insurance Co. Inc. Chief Operating Officer Denden Tesoro said that disasters such as the California wildfires would also be considered in a decision to raise prices.

"Currently, the cost of reinsurance is still expensive, but it has kind of plateaued around 2023. There are signs that it's going down, but it's nowhere near where it was before," Tesoro said.

"While we can cautiously hope that the market will soften," she added, prices will not be sustainable "if insurers will continue to price at the same level even though the cost of reinsurance is already very high."

Insurers, however, cannot simply raise prices without regulatory approval, Relloso said. Market conditions will also have to be factored in, he added.

With motor insurance making up over 50 percent of the industry's portfolio in the Philippines, Relloso said that insurers now have to assess the risks attendant to rising consumer interest in electric vehicles.

The trade wars started by US President Donald Trump will also have an impact, as these will affect trade and consequently the economy.

"Anything that affects the economy, we feel in the insurance industry. Either we insure less goods or the cost, for example, of preparing stuff locally would be more expensive because we import all this stuff, so an increase in tariffs should also lead to an increase in prices," he added.

The nonlife insurance industry saw net income decline by 2.63 percent to P8.89 billion last year from P9.13 billion in 2023, Insurance Commission data showed.

Total losses rose to P29.09 billion, up 10.15 percent from P26.41 billion.

Source: manilatimes.net