AIG expanding exposure in Phl

MANILA, Philippines - The consistent growth of the country’s gross domestic product (GDP), the all-important investment upgrade by international credit rating agencies, increasing inflow of foreign direct investments (FDI), and the impending Asean economic integration have stimulated global insurance companies to refocus on the Philippines, particularly the corporates.

AIG Philippine Insurance, a subsidiary of global financial giant AIG, is re-introducing its D&O insurance, an insurance policy that protects directors and officer of organizations against claims resulting from decisions or actions undertaken.

“The time of the Philippines is now,” AIG Philippines president and chief executive officer Mark Lwin said, taking note of the increasing FDIs.

Cross border trade, possible mergers and acquisitions (M&A), and the swelling FDIs mean there will be a lot of corporate activities, and danger of fraud or wrong corporate decisions become inevitable.

Lwin said D&O insurance is still on the upswing in the Philippines, while the rest of the region has been embracing this in the face of increasing gains and failures in the corporate world.

According to the Good Governance Advocacies and Practitionaire of the Philippines (GCAPP), only a few listed firms in the Philippines hold D&O policies, among the Smart Communications and SM Investments Corp.

For AIG Philippines alone, the D&O business so far has amounted to $5 million in the first few months of 2014. That represents a mere 2.5-percent market share in the region expectedly bannered by Japan, Singapore and Hong Kong.

Lwin expects a 12- to 15 percent growth in premiums in the Philippines as the economy continues to strengthen and the corporate market matures.

P&O is liability insurance payable to the directors and officers of a company, as indemnification (reimbursement) for losses or advancement of defense costs in the event an insured suffers such a loss as a result of a legal action brought for alleged wrongful acts in their capacity as directors and officers. Such coverage can extend to defense costs arising out of criminal and regulatory investigations/trials as well; in fact, often civil and criminal actions are brought against directors/officers simultaneously.

AIG officials said D&O insurance is closely associated with broader management liability insurance, which covers liabilities of the corporation itself as well as the personal liabilities for the directors and officers of the corporation.