Philippine Standard time

Assessment of the Asset Management Industry in the Philippines: The Case of the Variable Unit-Linked Insurance Sector

The insurance sector plays a key role in the socio-economic development of a country, providing financial security to the people as well as contributing to the government in terms of taxes. e sector includes life and non-life insurance as well as pre-need insurers, mutual benefit associations (MBAs), health maintenance organizations (HMOs), and micro- and macro-insurers. The Philippine insurance sector realized significant developments in the past years as evidenced by increase in gross premiums, assets invested, and income of the sector.

The insurance penetration rate, which measures the sector’s contribution to the country’s Gross Domestic Product, slightly increased from 1.69% in 2020 to 2.03% in the third quarter of 2021 (Bangko Sentral ng Pilipinas, 2022). Life insurance continued to dominate the sector with 39% total share of the market as of 2019. One form of life insurance offered in the country is the variable unit-linked insurance (VUL). A VUL insurance is defined as a life insurance policy with an investment component. VUL insurance includes investment subaccounts, which function similar to a mutual fund, that allow for the investment of the cash value (Investopedia, 2022).

Similarly, the pandemic changed the perception among consumers toward insurance products. A study conducted by EY Global mentioned that there is an approximate increase of 8% in life insurance application by consumers under the age of 45. This reflects the spiking interest among the younger population towards insurance products (EY Global, 2021).

Despite these developments in the industry, the VUL insurance sector still lags behind in terms of the percentage of Filipino adults who own a life insurance. According to the latest Financial Inclusion Survey of the Bangko Sentral ng Pilipinas, the percentage of Filipino adults who own a life insurance in 2019 stands at 23% or equivalent to 16.6 million Filipinos aged 15 years old and above (Bangko Sentral ng Pilipinas, 2022)

With this, the CFA Society Philippines (“Society”), in partnership with the Asian Institute of Management Gov. Jose B. Fernandez, Jr. Center for Sustainable Finance, proposed to conduct an in-depth study on the Philippine asset management industry, primarily focusing on the VUL insurance sector. This is the third phase of a series of studies to assess the Philippine asset management industry, following the assessment of the unit investment trust fund (UITF) and mutual fund sectors in the Philippines.

With the growing prospect for mutual funds in the Philippines and the challenges faced by the VUL insurance industry, it is worth taking a closer look at the industry from the perspective of both the VUL insurance providers and retail investors and to assess the current status, problems, and future direction of the sector while comparing its performance with the UITF and mutual fund sectors.


This publication has been cited time(s).