Typhoon Haiyan

Typhoon Haiyan

On November 8 Typhoon Haiyan, carrying winds of nearly 200 miles per hour, slammed into the Philippines. By November 11 the widespread damage to cities, towns and fishing villages across the central Philippines from the typhoon had become clear. According to some estimates, as many as 10,000 fatalities in Tacloban alone can be attributed to the storm. Following is background information on the insurance implications of the storm, based on insights from Dr. Robert Hartwig, President of the Insurance Information Institute.

The insured losses from Typhoon Haiyan are likely to be quite low for two reasons.

  • First, the storm did not have a direct impact on Manila, the capital and the largest city in the Philippines, which is well to the north of the track of Haiyan.
  • Second, and most significantly, the Philippines is a very small market for property/casualty (i.e., nonlife) insurance, with premiums written in 2012 coming to just $1.23 billion. On a per capital basis this works out to just $12.70, compared with $1,223.90 in the U.S. Even compared with the rest of Asia, the “penetration” of insurance in the Philippines is relatively low. Premiums per capita in Asia as a whole were $91.90 in 2012.

However, economic damages are likely to be significant, with Haiyan having a major negative impact on the Philippine economy. Prior to Haiyan, the strongest storm to hit this region was Super Typhoon Megi in October 2010, which impacted the Luzon region. Insured losses for that storm were estimated at less than $150 million.

The experiences of Haiyan and Megi are unlikely to spur large scale purchases of insurance in this region. The region is quite poor and insurance purchased tends to rise with GDP and income. The Philippine economy has been growing at a relatively strong pace (a 7.5 percent annual rate as of the second-quarter of 2013) and over time the country should become relatively better insured. However, in 2012 GDP per capital ranked 124th out of 184 countries ranked by the IMF in 2012.

Below is information on population, gross domestic product, insurance premiums and leading insurers in the Philippines.

 

POPULATION, 2011-2014 (1)

Year Population
2011 101,833,938
2012 103,775,002
2013 105,720,644
2014 107,668,231

(1) Estimated.

Source: U.S. Central Intelligence Agency.

 

 

GROSS DOMESTIC PRODUCT, 2009-2013 (1)

Year GDP
2009 $327.2
2010 324.9
2011 353.2
2012 393.4
2013 454.3

(1) Based on Purchasing Power Parity calculations, which take into account the relative cost of living and inflation rates of countries. GDP estimate for July for each year shown.

Source: U.S. Central Intelligence Agency.

 

 

LIFE AND NONLIFE INSURANCE PREMIUMS, 2013

(U.S. $ millions)

  Direct premiums written
Nonlife premiums (1) $1,233
Life premiums 4,060
Total premiums $5,293
Percent of total world premiums 0.11%

(1) Includes accident and health insurance.

Source: Swiss Re, sigma, No. 3/2014.

View Archived Tables

 

 

LEADING NONLIFE INSURANCE COMPANIES, 2012

  Gross written premiums
Company PHP Mn USD Mn
Malayan Insurance  6,777.8 160.5
Prudential Guarantee  5,029.6 119.1
BPI/MS  4,632.4 109.7
Pioneer Insurance  4,399.0 104.2
Chartis  2,995.4 70.9
Charter Ping AN  2,893.7 68.5
Federal Phoenix  2,553.4 60.5
UCPB General  2,395.6 56.7
Standard Insurance  2,172.4 51.4
MAPFRE Insular  1,914.8 45.3

Source: Axco Insurance Information Services.

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LEADING LIFE INSURANCE COMPANIES, 2012

  Gross written premiums
Company PHP Mn USD Mn
Sun Life  20,059.1 475.0
Pru Life  15,594.5 369.3
Philam Life  15,291.0 362.1
Philippine AXA  12,276.9 290.7
Ayala Life-BPI-Philam  11,466.8 271.5
Insular Life  9,196.4 217.8
Manulife  7,484.9 177.3
Grepalife Financial  5,822.7 137.9
Manulife China Bank  4,512.5 106.9
PNB Life  3,932.8 93.1

Source: Axco Insurance Information Services.

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Further information

Philippine Insurers and Reinsurers Association

Web: www.pirainc.org