Review of insurance capital requirements done by March – Insurance Commission

MANILA, Philippines — The Insurance Commission (IC) may conclude by March a review of the proposed adjustment in the capitalization requirement imposed on local insurance companies.

In an interview, Insurance deputy commissioner Ferdinand George Florendo said the IC has set up a team to study the proposal of the non-life insurance industry to temper the increase in the net worth standards set under the Insurance Code.

“What the IC commissioner did was set up a study group to see if there is a need to recommend adjustments or a cap in the increase in net worth,” Florendo said.

Earlier, Insurance commissioner Dennis Funa said the non-line insurance sector has called for a review of Republic Act 10607 or the Amended Insurance Code of the Philippines, particularly the provision that increases the net worth requirement of insurance companies until 2022.

Under the law, new players in the industry are required to have P1 billion in paid-up capital when they establish their business in the country.

Existing insurers, for their part, must have a paid-up capital of at least P900 million by December 2019 and P1.3 billion by December 2022.

Funa said the Philippines appears to have the highest net worth requirement in the region, and on top of this, has adopted a risk-based capitalization system.

Finance Secretary Carlos Dominguez said the industry needs a stronger capitalization requirement to remain “strong and resilient,” and for it to be competitive amid the economic integration of the Association of Southeast Asian Nations (ASEAN).

Dominguez said the current capital requirement of P550 million for insurance firms is not enough to compete against big players in the region.

He said a financially sound insurance industry is also part of the government’s program to strengthen the domestic capital market.