MANILA, Philippines - The level of minimum working capital, risk-based capital (RBC) and other forms of taxes of the country’s insurance industry will be harmonized with regional and international standards by 2016, the insurance regulator said.
The minimum paid-up capital for insurance companies will increase to P550 million in two years time, Insurance Commissioner Emmanuel F. Dooc said, adding that the new requirements would make Philippine insurers competitive with the ongoing Asean Economic Community (AEC) integration.
The minimum capital levels have already been outlined but the RBC, tariffs and taxes have yet to be finalized.
The Asian Development Bank (ADB) and NMG Consulting are assisting the Philippine insurance industry in formulating, finalizing and implementing the new regulations.
NMG Consulting is a specialist, multinational consultancy focused on the insurance, reinsurance and investment sectors.
IC deputy commissioner Vida T. Chiong said NMG Consulting is presently conducting studies on RBC formula with both the public and private insurance sector.
After the consulting period in end-November, the finalized RBC framework will be fully implemented on or before 2016.
Aside from deciding on the RBC ratio, the industry must agree on the types and extent of risk factors and exposures.
“The factors differs from country to country, thus the country’s insurers have to agree on the types of risks, risk factors and exposures that will be included in the RBC formula,” Chiong told reporters yesterday.
The existing RBC formula takes into consideration the minimum paid-up capital requirement, the insurer’s networth computed by 100-percent risk ratio.
However, it has become complicated with the increasing number of risks and the increasingly complicated nature of insurance.
Cyber risks and increasing natural catastrophes are among the factors that had increased the risk factors.
Much like the global banking community, the insurance industry has to contend with international standards in the changing global financial environment.
The banking sector is making the adjustments under the Basel capital and risks framework, while the insurance sector has Solvency I and II standards.