Financial services ‘to take time’-A A +A
Monday, August 4, 2014
FULL integration of the Association of Southeast Asian Nations’ (Asean) financial services, particularly in the insurance industry, might come later than 2015.
This is according to Riza Mantaring, president and chief executive officer of Sun Life Financial of Canada Philippines Inc (SLOCPI), in an interview on Saturday. She projected that full integration of financial services would come after 2020.
“That one (the financial services), I think, will take more time because the regulations in different countries (in Southeast Asia) are very different. They still have to be harmonized,” Mantaring said.
Unlike goods where entry and distribution from one country to another is made easier with less tariff because of integration, financial services are a complex system, she said. Although country leaders are working to have integration of financial services sooner, the insurance industry is complex.
“For life insurance, the capital requirement and licensing requirement (of Asean-member countries) are different,” Mantaring said. In the Philippines, an amount of not below P500 million is required to open a life insurance company. However, the amount is expected to rise to P1 billion in 2020, she said.
She said there are many insurance companies trying to penetrate the country but encounter difficulty in setting up because of the requirements. She said that other factors to consider include the companies’ entry strategy and the distribution channel.
“There are no rules yet in the Asean integration for insurance. Possibly, full integration might not be until 2020 because there are still many things to be harmonized,” she said.
For Sun Life Financial alone, Mantaring said its Philippine operations is the most successful in Southeast Asia. Sun Life Financial is also present in Indonesia, Malaysia and Vietnam. She said that its chief executive officer dubbed the Philippines as its “most successful operation” outside Canada, where it was founded.
SLOCPI has been leading in the insurance industry in the Philippines in the past years. Since 2011, it ranked as the number one life insurance company in the country in terms of gross premiums. In that year, it registered a gross premium of P14 billion. In 2012, it reached P20.2 billion; and in 2013, it recorded P42 billion in total premiums, together with Sun Life Grepa Financial Inc., its joint venture with the Yuchengco Group.
There are 33 insurance companies in the Philippines at present, she said. Sun Life has 25 percent market share. Mantaring attributed the growth of the company to the “very strong” Sun Life brand in the Philippines, growing number of financial advisors and the company’s high level of customer service.
At present, Sun Life in the Philippines has close to 6,000 financial advisors.
Mantaring said the company can also release claims in as short as three hours, given that the amount to be claimed is not more than a million and the claim is not contestable.
The insurance industry in the country, according to industry players, is now driven by unit-linked products, or those life insurance products linked to investments. For SLOCPI, ULP covers 90 percent of the sales of the 100,000 new policies registered in 2013.
Mantaring said mutual funds investors in the Philippines are also increasing. The Sun Life Management Company Inc (SLAMC) records close to 50,000 investors since it was introduced in 2011, when 28 percent of them are below 30 years old.
“The Philippine market is conservative compared to other countries (where most prefer to put money in banks) but over the past years they are in equity funds. We see increased willingness to invest in riskier instruments,” she said. Under equity funds, returns are not guaranteed.
For this year, Mantaring said SLOCPI’s growth will be slower this year because of market volatility but sales will remain to be “healthy.”
“We have many foreign investments last year, but when medyo nag improve ang economy sa West, you saw the money going back to the West.But (in the Philippines) its trending upward pa rin. The Philippine market is relatively resilient from external factors kasi 70 percent is driven by domestic consumption,” she said.
Mantaring said the market can expect more products from Sun Life to be introduced before this year ends.
Published in the Sun.Star Cebu newspaper on August 05, 2014.