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Creditor Insurance in the Philippines

  • March 2015
  • -
  • Finaccord
  • -
  • 26 pages

Finaccord’s report titled Creditor Insurance in the Philippines offers uniquely detailed insights into the market for creditor insurance, sometimes also referred to as payment protection insurance or loan-related insurance, as acquired by individual borrowers in the Philippines. Drawing on the results of a survey of 61 lending institutions, the study analyses the distribution of creditor insurance by banks and other lending institutions, how provision rates vary for different lending products, operating models used for arranging creditor insurance, and distribution partnerships weighted by the size of distributors. The PartnerBASE™ dataset that accompanies the report details all creditor insurance distribution deals traced by Finaccord. In short, this study will provide you with the definitive guide to current and future opportunities in creditor insurance in the Philippines.

Table Of Contents

Creditor Insurance in the Philippines
0.0 EXECUTIVE SUMMARY 1
1.0 INTRODUCTION 3
What is this report about? 3
This report provides a comprehensive analysis of loan-related insurance policies in the Philippines 3
Rationale 3
The report tracks over 80 separate initiatives for marketing creditor insurance through lending institutions 3
Methodology 3
Survey of banks and other lending institutions 3
Market data 4
Definitions 5
Creditor insurance 5
Mortgages, consumer finance and credit cards 5
Weighted provider share of partnerships 5
Operating models 6
Abbreviations and exchange rates 7
PartnerBASE and market data annexe 7
Finaccord 7
2.0 MARKET ANALYSIS 9
Banks and other lending institutions covered 9
Introduction to the banking sector 9
The Philippines hosts a substantial and relatively complex banking sector… 9
…composed of universal and commercial banks, thrift (or savings) banks, and rural and co-operative banks 10
Regulations have prevented many foreign banks from establishing themselves in this market… 10
… although these are in the process of being amended to foster more competition 10
There have been several significant mergers or acquisitions in recent years 10
Consumer lending market size and growth 12
Mortgage lending 12
Mortgage balances increased at a nominal compound annual rate of 19.1% between 2010 and 2014… 12
Non-mortgage lending 13
…and the value of total non-mortgage consumer lending has also expanded in recent years 13
The Philippines also possesses a fairly large informal lending market 13
Credit and other pay later cards 14
Credit and other pay later cards per capita inched up from 0.07 in 2010 to 0.09 in 2014 14
Creditor insurance provision rates, operating models and partnerships 16
Creditor insurance linked to mortgages 16
Over 90% of Filipino mortgage lenders operate a scheme for related creditor insurance 16
Apart from OAC, the largest players in this arena are captive and joint venture underwriters… 16
…with six of the top eight providers owned or co-owned by banking groups 16
Nevertheless, as many as 14 entities make use of a single external underwriter… 16
… and 11 work with multiple providers for this type of creditor insurance 17
Creditor insurance linked to consumer finance 19
The provision rate for creditor insurance linked to consumer finance is somewhat lower 19
Many partnerships in this field are identical to those for mortgage-related creditor insurance… 19
…although nine lending institutions are only active in this domain 19
Creditor insurance linked to credit cards 21
Credit card payment protection insurance is quite commonly marketed by card issuers in the Philippines. 21
. with Manulife and BPI-Philam Life ranked highest by weighted share of partnerships… 21
. followed by Sun Life Grepa Financial and AXA Philippines… 21
… and then by a further five underwriters 21
Creditor insurance risk coverage 23
Most policies are configured as basic risk life policies covering death only 23
Alternative distribution channels 24
There is little evidence for the development of alternative distribution channels for creditor insurance 24
Creditor insurance market size, growth and forecast 24
The Filipino market for creditor insurance is likely to be expanding rapidly from a low base… 24
… in spite of the apparent absence of policies related to point-of-sale automotive finance… 24
. and is forecast to increase further up to 2018 25

LIST OF GRAPHICS / TABLES

0.0 EXECUTIVE SUMMARY 1
1.0 INTRODUCTION 3
Banks and other lending institutions in the Philippines contacted by Finaccord, segmented by type. 4
2.0 MARKET ANALYSIS 9
Residential mortgage lending balances outstanding in the Philippines (absolute and per capita), 2010 to 2014 12
Consumer non-mortgage lending balances outstanding in the Philippines (absolute and per capita), 2010 to 2014 13
Credit and other pay later cards issued and per capita in the Philippines, 2010 to 2014 14
Key data points for the consumer lending market in the Philippines, 2010 to 2014 15
Provision of creditor insurance linked to mortgages in the Philippines, 2015: provision rate, operating models and weighted provider share of partnerships 18
Provision of creditor insurance linked to consumer finance in the Philippines, 2015: provision rate, operating models and weighted provider share of partnerships 20
Provision of creditor insurance linked to credit cards in the Philippines, 2015: provision rate, operating models and weighted provider share of partnerships 22
Risk coverage of creditor insurance policies in the Philippines, segmented by type of underlying product, 2014 23
Creditor insurance gross written premiums in the Philippines, segmented by policy type, 2010, 2014 and 2018 25
Creditor insurance gross written premiums in the Philippines, segmented by cover type, 2010, 2014 and 2018 26
Creditor insurance gross written premiums in the Philippines, segmented by policy and cover type, 2010, 2014 and 201826

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