IC to cap minimum capital requirement for insurance firms at P900 million

MANILA, Philippines — The Insurance Commission (IC) plans to cap at P900 million the minimum capital requirement for local insurance companies.

In a text message, Insurance Commissioner Dennis Funa said the IC would make a recommendation to Finance Secretary Carlos Dominguez to amend the Insurance Code, particularly on the capitalization requirement for insurance companies.

“I will recommend to Secretary Dominguez that we stop at P900 million. Meaning, I will suggest that we forego with the 2022 increase to P1.3 billion as stated in the amended Insurance Code,” Funa said.

Under Republic Act 10607 or the Insurance Code, new players in the industry are required to have P1 billion in paid-up capital when they establish a business in the country.

Existing insurers must have a net worth of at least P250 million by June 30, 2013, P550 million by Dec. 31, 2016, P900 million by Dec. 31, 2019 and P1.3 billion by Dec. 31, 2022.

However, Funa said proceeding with the P1.3 billion net worth hike by 2022 would make the Philippines with the highest capital requirement for insurance companies within the Southeast Asian region.

The Insurance Commission’s recommendation came after a review of the policies, which was prompted by clamor from both life and non-life insurance firms.

Earlier, the Philippine Life Insurance Association said insurers are asking the IC to cap the capitalization requirement at P900 million.

PLIA president Hans Loozekoot said the P900 million capital requirement, which was implemented starting Dec. 31, should already be enough to ensure that the industry is well-capitalized, and that it is at par with other insurers in the region.

In an advisory dated Dec. 2, 2019, Funa reminded all insurance companies in the country to comply with the increase in minimum net worth requirements effective Dec. 31, 2019.