IC proposes 60-day moratorium

MANILA, Philippines — The Insurance Commission (IC) is pushing for a 60-day payment moratorium for insurance policies and pre-need contracts under the Bayanihan 2 bill, similar to the period approved by the bicameral conference committee for debt payments.

In a letter sent to the committee on Aug. 12, Insurance Commissioner Dennis Funa proposed a two-month grace period for insurance policies and pre-need premium payments as relief to customers affected by the COVID-19 pandemic.

“We sent a letter to Congress to suggest that life insurance and pre-need customers instead be given a 30-day extension in addition to the usual and existing 30 or 31-day contractual grace periods under insurance policies and pre-need contracts,” Funa said, adding that “taken together, this makes for a total extension of 60 days in favor of the consumers.”

During deliberations last week, the bicam decided to adopt a 60-day moratorium on loan payments.

However, Funa, in a text message to The STAR, said this does not yet cover premium payments for insurance policies and pre-need contracts.

“From what I read, it refers only to bank loans,” he said.

This means the difference between the House of Representatives and Senate versions, as far as premium payments are concerned, remains unsettled.

The IC has warned regulators that passing a one-year moratorium on premium payments may harm insurance and pre-need companies.

“We understand that the proposed policy in House Bill 6953, while favoring life insurance and pre-need customers, may spell financial danger to life insurance and pre-need companies, which are among the pillars of the Philippine economy that also need protection,” Funa said.

He said this measure, if passed into law, could add to the challenges being faced by the industry, which is already having difficulties in generating premiums due to the pandemic.

“Life insurance and pre-need companies are still reeling from the effects of the reduced economic activity, which has already resulted in the reduction of premiums collected and earned. With due respect to Congress, we fear that a one-year moratorium will exacerbate the adverse economic effects of the pandemic to said industries’ financial and capital positions, such that said industries may be permanently unable to recoup the consequent losses during this period, even if we were to consider future premiums,” the IC chief said.

On the other hand, Funa said a compromise period of 60 days would balance the interest of consumers and the insurance companies.

“The suggestion affords both life insurance and pre-need customers, as well as life insurance and pre-need companies, much needed relief from the adverse economic and financial effects of the COVID-19 pandemic,” Funa said, adding that “it will help ensure the continued ability of life insurance and pre-need industries to service their commitments to and respond to the needs of their customers in these trying times.”