P3.89B in COVID-related insurance claims paid in 2020

Health workers attend to person-under-investigation for COVID19 on a public hospital in Manila.
INQUIRER PHOTO / RICHARD A. REYES

MANILA, Philippines — Insurance companies paid out P3.89 billion in claims related to the deadly COVID-19 disease last year, with nearly a third or P1.22 billion representing death benefits.

The second-biggest payout was for in-patient benefits—mainly to settle hospital bills —amounting to P1.18 billion. Out-patient benefit payments such as medical reimbursements reached P933.7 million.

Health maintenance organizations (HMO), which are regulated by the Insurance Commission, shouldered almost half or P1.91 billion of the total claims paid during the first full year of the pandemic.

Insurance Commissioner Dennis Funa on Tuesday said that life insurers shouldered P1.46 billion, or 38 percent, of the total claims, while mutual benefit associations (MBAs) settled P354.9 million (9 percent of the total) and nonlife insurers, P160.2 million (4 percent).

Survey of companies

The figures were based on three rounds of surveys conducted by the insurance regulator to monitor the impact of COVID-19 on the industry’s finances. The latest survey covering claims from October to December 2020 generated responses from 24 life insurance companies, 43 nonlife firms, 27 MBAs and 17 HMOs.

In the fourth quarter alone, claims related to the pandemic amounted to P1.48 billion, smaller than the P2.09 billion reported during the longer survey period of May-to-September last year. Life insurers shelled out the most at P646.8 million in claims from October to December.

“Out of the amount of P1.48 billion in the third survey, P1.27 billion was paid within contractual obligations and P209.4 million was paid ex gratia, or outside of contractual obligations,” Funa said.

Death benefits topped the biggest payout type for the fourth quarter at P602.1 million.

Rising claims

Funa also pointed to rising average claims paid by the four insurance sectors across the three surveys last year.

The average of claims paid within contractual obligations for the first survey conducted from March to April 2020 was P153.6 million, which increased to P361.3 million in the second survey and to P422.2 million in the third poll. Claims paid outside of contractual obligations for the first survey was P9.8 million, which increased to P56.9 million in the second and to P69.8 million in the third survey.

“The upward trends in average claims paid are good indicators of the steady commitment of the four regulated sectors to pay COVID-related benefits to their customers and members at the time of their critical need amid the pandemic,” Funa said.

Reliability

Given the reliability of insurers to respond to a crisis such as the pandemic, Funa said he was hopeful that more Filipinos would avail themselves of insurance coverage.

As of end-2020, insurance penetration or the share of sales and premiums to gross domestic product (GDP) inched up to 1.71 percent from 1.64 percent in 2019, still small compared to most of the Philippines’ neighbors.

“We hope that the aggregate amount of COVID-related claims paid in 2020 by life and nonlife insurers, MBAs and HMOs will continue to inspire consumer confidence in the four [regulated] sectors, and educate our fellow Filipinos of the benefits of availing themselves of the insurance and HMO products and the benefits of MBA membership,” Funa said.