Saint Columban College

Pagadian City

Financial Markets

Carpio, Angel Buen

Dinopol, Ivy
Gambe, Suzette
NON-BANKING FINANCIAL INSTITUTIONS

Non-banking financial companies (NBFC) are companies registered under the Companies Act,
1956. They are responsible for providing financial services but are not regulated by a national or
international governing body and do not hold a full-fledged license for conducting operations.

The financial services offered by NBFCs include disbursement of loans and advances,
acquisition of stocks, shares or bonds etc. They do not accept demand drafts and are not a part of
payment/settlement system unlike banks. NBFCs are more commonly known in the forms of
microloan organisations, insurance companies, investment houses and more.

INSURANCE

What Is Insurance?

Insurance is a contract, represented by a policy, in which an individual or entity receives

financial protection or reimbursement against losses from an insurance company. The company
pools clients' risks to make payments more affordable for the insured.

Insurance policies are used to hedge against the risk of financial losses, both big and small, that
may result from damage to the insured or her property, or from liability for damage or injury
caused to a third party.

Understanding How Insurance Works

There is a multitude of different types of insurance policies available, and virtually any
individual or business can find an insurance company willing to insure them—for a price. The
most common types of personal insurance policies are auto, health, homeowners, and life. Most
individuals in the United States have at least one of these types of insurance, and car insurance is
required by law.
Businesses require special types of insurance policies that insure against specific types of risks
faced by a particular business. For example, a fast food restaurant needs a policy that covers
damage or injury that occurs as a result of cooking with a deep fryer. An auto dealer is not
subject to this type of risk but does require coverage for damage or injury that could occur during
test drives.

There are also insurance policies available for very specific needs, such as kidnap and ransom
(K&R), medical malpractice, and professional liability insurance, also known as errors and
omissions insurance.

Insurance Policy Components

When choosing a policy, it is important to understand how insurance works.

[Important: Three crucial components of insurance policies are the premium, policy limit, and
deductible.]

A firm understanding of these concepts goes a long way in helping you choose the policy that
best suits your needs.

Premium

A policy's premium is its price, typically expressed as a monthly cost. The premium is
determined by the insurer based on your or your business's risk profile, which may include
creditworthiness. For example, if you own several expensive automobiles and have a history of
reckless driving, you will likely pay more for an auto policy than someone with a single mid-
range sedan and a perfect driving record. However, different insurers may charge different
premiums for similar policies. So finding the price that is right for you requires some legwork.
Policy Limit

The policy limit is the maximum amount an insurer will pay under a policy for a covered loss.
Maximums may be set per period (e.g., annual or policy term), per loss or injury, or over the life
of the policy, also known as the lifetime maximum.

Typically, higher limits carry higher premiums. For a general life insurance policy, the maximum
amount the insurer will pay is referred to as the face value, which is the amount paid to a
beneficiary upon the death of the insured.

Deductible

The deductible is a specific amount the policy-holder must pay out-of-pocket before the insurer
pays a claim. Deductibles serve as deterrents to large volumes of small and insignificant claims.
Deductibles can apply per-policy or per-claim depending on the insurer and the type of policy.
Policies with very high deductibles are typically less expensive because the high out-of-pocket
expense generally results in fewer small claims.

Special Considerations

With regard to health insurance, people who have chronic health issues or need regular medical
attention should look for policies with lower deductibles. Though the annual premium is higher
than a comparable policy with a higher deductible, less expensive access to medical care
throughout the year may be worth the trade-off.

Here are the top life insurance companies in the Philippines:

1. Sun Life of Canada (Philippines), Inc.

2. AXA Life Insurance Corporation
3. Pru Life Insurance Corporation of U.K.
4. Philippine American Life & General Insurance Corporation
5. BPI-Philam Life Assurance Corporation Inc.
6. BDO Life Assurance Corporation
7. Manufacturers Life Insurance Corporation Inc.
8. FWD Life Insurance Corporation
9. United Coconut Planters Life Assurance Corporation
10. Insular Life Assurance Corporation
You may refer to the table below for a more comprehensive look in the performance of each life
insurance companies for the year 2018.

Insurance Company NBAPE

Sun Life of Canada (Philippines), Inc P8,221,221,183
Philippine AXA Life Insurance. Corp P5,998,076,869
Pru Life Insurance Corp. of U.K. P5,758,660,185
Philippine American Life & Gen. Ins. Co. P4,425,212,142
BPI Philam Life Assurance Corp., Inc. P3,727,064,538
BDO Life Assce. Co., Inc. (Generali Pilipinas Life) P3,488,805,557
Manufacturers Life Ins. Co. (Phils.), Inc., The P3,479,023,654
FWD Life Insurance Corp. P2,516,095,794
United Coconut Planters Life Assce. Corp P2,313,865,366
Insular Life Assce. Co., Ltd., The P2,177,840,122
Top 10 Life Insurance Companies in the Philippines Based on Net Income
Insurance Company Net Income
Philippine American Life & Gen. Ins. Co. P9,796,104,537
Sun Life of Canada (Philippines), Inc. P6,769,777,847
Philippine AXA Life Insurance. Corp 2,745,920,000
Manufacturers Life lns. Co. (Phils.), Inc., The P2,593,034,081
Insular Life Assce. Co., Ltd., The P2,302,848,891
BPI Philam Life Assurance Corp., Inc. P1,704,932,133
Pru Life Insurance Corp. of U.K. P840,049,243
United Coconut Planters Life Assce. Corp. P626,335,238
Philam Equitable Life Assurance Co., Inc P528,797,799
BDO Life Assce. Co., Inc. (Generali Pilipinas Life) P473,882,653
Top 10 Life Insurance Companies in the Philippines Based on Assets
Insurance Company Asset
Philippine American Life & Gen. Ins. Co. P246,751,301,491
Sun Life of Canada (Philippines), Inc. P222,435,091,951
Insular Life Assce. Co., LTD., The P130,415,994,981
Philippine AXA Life Insurance, Corp. P115,129,009,149
BPI Philam Life Assurance Corp., Inc. P101,376,320,926
Manufacturers Life Ins. Co. (Phils.), Inc., The P95,854,435,286
Pru Life Insurance Corp. of U.K. P94,832,563,076
SunLife Grepa Financial, Inc. P44,562,132,022
BDO Life Assce. Co., Inc. (Generali Pilipinas Life) P41,291,896,464
Manulife Chinabank Life Assce. Corp. P34,647,474,877
Top 10 Life Insurance Companies in the Philippines Based on Net Worth
Insurance Company Net Worth
Philippine American Life & Gen. Ins.Co. P78,872,723,360
Insular Life Assce. Co., LTD., The P37,028,437,013
Sun Life of Canada (Philippines), Inc. P25,406,830,608
Manufacturers Life Ins. Co. (Phils.), Inc., The P14,431,503,648
United Coconut Planters Life Assce. Corp. P10,992,339,403
Philippine AXA Life Insurance, Corp. P8,550,908,245
BDO Life Assce. Co., Inc. (Generali Pilipinas Life) P7,701,898,262
BPI Philam Life Assurance Corp., Inc. P6,284,060,631
Pru Life lnsurance Corp. of U.K. P3,259,979,275
SunLife Grepa Financial, Inc. P3,008,814,124

INSURANCE IMPACT ON PHILIPPINE ECONOMY

PH life insurance industry seen to grow 16% in 2018

By Joann Villanueva January 31, 2019, 7:23 pm

MANILA -- A Philippine life insurance industry executive is optimistic about a 16 percent
growth in the gross written premiums of the sector in 2018, driven mainly by the rise in the
number of the middle class.

In an interview after the induction ceremony of new Philippine Life Insurance Association, Inc.
(PLIA) officers in Makati Thursday, PLIA President Olaf Kliesow said that if the industry grew
by 7 percent in the last quarter of last year, same as its growth in the same period in 2017, then a
16 percent full-year growth is possible based on their estimates.

“I would be very positive that it would be a double digit growth in any event. It’s just a question
whether somewhere in the range between 10 and 16 percent. But at this point it’s speculation so
let’s wait for the figures of the fourth quarter,” he said.

“Overall, for sure, we can already tell another positive year for the life insurance sector, which is
adding up very nicely to previous years,” he said.

The possible 16 percent growth in 2018 is an improvement from the around 11 percent or low
double digit expansion in 2017, he said.

Data from the Insurance Commission (IC) showed that at the end of the third quarter of 2018, the
life insurance sector registered a PHP174.15 billion in total premiums.

Kliesow attributed the expansion of the life insurance sector to a combination of the growing
middle class and the strong domestic growth.

“So it’s a reflection of the strong economic output also in 2018. And more and more people are
becoming aware of the need to be insured,” he said.

Another factor is the financial literacy and awareness programs of the life insurance companies,
he said.

For 2019, the PLIA president, who is also the Chief Executive Officer of Allianz PNB Life, is
hopeful for the industry’s expansion.
“I would be very happy if it’s another year that would generate premiums in excess of 10
percent,” he said, citing positive forecasts for the economy and the stock market for this
year. (PNA)

IMPACT ON HOUSEHOLD

The insurance, specifically healthcare insurance in the Philippines truly helps major number of
households. The main healthcare insurance company of the country is the Philhealth.
Accordingly, Republic Act 7875, otherwise known as “The National Health Insurance Act of
1995,” created the PhilHealth to implement the National Health Insurance Program of the
Philippines. PhilHealth, a government-owned and -controlled corporation was created on
February 5, 1995, to implement universal health coverage. Universal coverage means all
Filipinos will be covered for almost every conceivable medical procedure. PhilHealth subsidizes
a variety of treatments, including inpatient care and nonemergency surgeries, although it does
not cover all medical treatments and costs.

Premium contributions are shared by the employee and the employer, the amount of which is
determined using a table of contributions. Contributions are also derived from the government.
After deducting half of the premium requirement from the employees’ monthly salary, total
premiums are remitted by the employer to PhilHealth. PhilHealth membership increased from
over 22.4 million in 2010 to almost 40.6 million in 2015. Lifetime members and senior citizens
combined have the second highest coverage rate at 75 percent. This is mainly due to the
mandatory coverage of senior citizens starting in 2014.

With a population of 105 million, as of 2017, PhilHealth boasts of a 92 percent coverage. In

2013, 69 percent of PhilHealth funding came from the premium payments of its members, while
31 percent came from premiums paid by sponsored program members. Contributions in 2013
totaled P55 billion. PhilHealth basically purchases medical services from various health
providers and pharmacists, and pays for these according to an agreed upon provider payment
systems.

IN 2010, PhilHealth introduced the No Balance Billing Policy through PhilHealth Board
Resolution 1441, Series of 2010, for the most common medical and surgical conditions in the
country. PhilHealth issued Circular 011-2011 on August 5, 2011.The NBB policy meant “that no
other fees or expenses shall be charged or paid for by the patient-member above and beyond the
packaged rates.”

Insurance penetration in PH remains low

The survey showed that about 71 percent of these middle- to upper-class Filipinos knew about
insurance but only 16 percent actually owned life insurance products.
The level of awareness goes up the higher one’s income segment is. In the lower-middle class or
C2 segment, lack of awareness was at about 85 percent while only 8 percent of the upper-middle
class (C1) and 7 percent of the upper class (AB) lacked awareness of insurance products.
When it comes to investments, Lopa said the research showed that only 43 percent of Filipinos
from the ABC segments were aware of mutual funds. She said this was understandable given that
mutual funds were newer financial products compared to insurance.
Mutual funds, created by financial wizards for those who have no time or expertise to manage
their own funds, pool investments for diversification and professional management.
“In that research, we tried to probe why that’s the case: why is the penetration still low? It boils
down to three main reasons: Filipinos still have the traditional mindset; Filipinos have short-term
time horizon and insurance is still viewed as a liability, an expense—not really as an asset,” Lopa
said.
On the “traditional” mindset, Lopa said bank account was still the prominent financial tool for
most people. About 16 percent of respondents have payroll bank accounts while 35 percent have
nonpayroll-related bank accounts.

Insurance with no agents: Singapore firm to try out PH market

By: Ben O. de Vera - Reporter / @bendeveraINQ

Inquirer Business / 03:31 PM August 01, 2019

Start-up insurer Singapore Life will start selling insurance products in the Philippines in 2020,
anticipating a license to operate in the Philippines before the end of 2019.
Dennis B. Funa, Insurance Commission (IC) chief, said in a text message that Singapore Life was
expected to apply and submit requirements for a license “in the coming weeks” and the license

Singapore Life was so far the only foreign insurer interested in doing business in the Philippines,
according to Funa.

In an e-mail, Singapore Life Philippines chief executive Severinus Petrus Paulus Hermans
confirmed that the company was already registered with the Philippines’ Securities and Exchange
Commission (SEC) and currently applying for a life insurance license with the IC.

Hermans said the company would invest an initial P1 billion in capital, an amount mandated for
new insurers.

But he said more funds were likely to be poured into Singapore Life’s operations in the Philippines
although Herman said he was not at liberty to disclose the total amount of funds that the company
would bring in.

Hermans said the company has had a “successful start” in Singapore drawing “great interest of the
investor community.” This prompted a decision to expand in Southeast Asia, he added.

After a study of different Southeast Asian markets, Hermans said, the company picked the
Philippines as its next site because of the Philippines’ “high-growth potential and internet
penetration.” He said Singapore Life’s business model uses “modern technology to reach
unmatched efficiency” and offer insurance products to a ‘broad market.”

Being a start-up Singapore Life would sell its products and services online.

The company, according to Hermans, “has been set up with the technology of today using the
benefits of cloud-based systems” and API, or technology that allows applications to speak to each
other, platforms. This, he said, would “allow us to maintain fair pricing” and offer products “for
much lower premium amounts than what is in general accepted in the market.”

Because it would be mainly internet-based, Hermans said Singapore Life would have no need for
agents but foresees working relationships with “retail brokers in the future.”
Aside from having a “digital back office,” Singapore Life would also use what Hermans said was
“digital front-end” systems or technology that allows files, like those in PDF formats, to be printed.

He cited the advance in the last 10 years in the Philippines of e-commerce, like the online malls
Lazada and Zalora which are taking “a growing share out of retail spending.”

Ride-hailing company Grab “is helping us stay mobile” while mobile banking “became a dominant
way to interact with banks,” Hermans said. “It is time for the insurance industry to follow,” he said.

“We believe that insuring your income, protecting your savings for high unexpected medical bills
and preparing for the funding of your education or retirement needs is relevant for a much larger
segment of the market than the top 10 percent that is currently being serviced,” Hermans said.

He said Singapore Life would tap into the potential of “this much larger part of the population and
support them with fairly priced financial tools.”

REFERENCES

https://www.worldbank.org/en/publication/gfdr/gfdr-2016/background/nonbank-financial-institution

https://www.pna.gov.ph/articles/1060684

https://business.inquirer.net/251823/insurance-penetration-ph-remains-low

https://business.inquirer.net/275899/insurance-with-no-agents-singapore-firm-to-try-out-ph-market