MANILA, Philippines — Local insurers will officially be required to hike their capitalization at the onset of 2023 as the government will no longer postpone the implementation of the measure.
Insurance Commission chief Dennis Funa said the final tranche of increase in capital requirement would be executory by the end of the year as scheduled.
This is despite requests from insurance firms to forgo the increase as doing so may limit competition in the industry.
“I understand the companies decided to bring this matter to Congress. But I think the effort is too late,” Funa told The STAR.
Under the Insurance Code, existing insurers must have a net worth of at least P1.3 billion by end-December from the current P900 million.
However, not all firms will be able to comply, especially as the pandemic decreased the net worth of insurance companies in the past two years.
Funa said the list of compliant insurance firms would be determined by the middle of 2023.
This is because the determination of companies’ net worth is based on the submitted annual statements that are due by end-April next year.
Once submitted, these are still subjected to examination and verification. There could also be a request for reconsideration among firms.
“The examination and verification is conducted on all companies. There are only a fixed number of examiners. So this will take time,” Funa said.
“So a definitive determination of the net worth will usually take months. We may be able to determine it by the middle of next year,” he said.
The Philippine Insurers and Reinsurers Association (PIRA) earlier said that more international companies would enter the local insurance industry, especially with the implementation of the final tranche of increase in capital requirement that would impact small local firms.
PIRA said several foreign firms have expressed interest in coming to the country and doing business to ramp up the local insurance sector.