Credit rating Agency AM Best has maintained a stable outlook on the Philippine non-life insurance market, citing growth factors and steady increase in the availability of reinsurance capacity in the country, which is expected to mitigate catastrophe risks for insurers while preserving market share.
The agency anticipates that price corrections in the property insurance segment and prudent risk selection will support premium rate adequacy going forward. Additionally, strong interest rates are expected to further increase insurers’ investment income.
However, increasingly volatile weather conditions are offsetting factors that could challenge the non-life insurance segment and generate volatility in underwriting results, experts noted.
On the other hand, regulatory and disclosure requirements are seen as beneficial, mainly in the long term, although these may increase short-term operational costs.
Additionally, uncertainties in global trade policies, particularly with the United States – the Philippines’ largest export partner – could also pose significant risks, AM Best highlighted.
Gross premiums written in the non-life segment increased by 10% in 2024 to reach PHP 140 billion (USD 2.4 billion), according to the country’s insurance industry regulator, the Insurance Commission.
“During the next 12 months, we expect Philippine’s non-life insurance market to continue its growth, driven by the country’s economic development and increasing insurance demand across various segments such as property, motor, and casualty,” said Susan Tan, senior financial analyst, AM Best. “This is anticipated to drive up insurance penetration in the medium term.”
The availability of reinsurance capacity in the Philippine non-life insurance market is steadily increasing, particularly for gross excess of loss programmes, AM Best stated.
Nevertheless, reinsurers remain cautious, maintaining pricing and underwriting discipline, particularly in high-risk, catastrophe exposed areas. This trend marks a shift from the ongoing capacity constraints in proportional reinsurance programmes witnessed in the past two years, analysts note.
Loss-free programmes saw risk-adjusted rate reductions, while loss-affected programmes experienced muted rate increases due to competition among reinsurers to retain and attract portfolios.
Victoria Ohorodnyk, director, AM Best, said: “The increased availability of reinsurance capacity is expected to ease the heightened catastrophe risk faced by non-life insurers. This favourable development should help reduce their growing risk retention while maintaining market share.”
