IC suspends disaster premium hike

MANILA, Philippines — The Insurance Commission (IC) has suspended its policy that will increase the premium on catastrophe insurance amid calls from the House of Representatives.

In its latest circular letter to non-life insurance and reinsurance? companies and licensed intermediaries in the Philippines, the IC has set aside the adoption of the revised schedule of minimum catastrophe rates.

“No premium adjustments on catastrophe insurance will come into effect,” IC commissioner Dennis Funa said in a Viber message.

It was last July when IC issued the guidelines on the adoption of the revised schedule of minimum catastrophe rates to be observed by all non-life insurance companies and intermediaries.

This would have applied to all insurance policies covering earthquake and typhoon and flood risks for both new and renewal businesses.

The revised premium rates already took effect last Nov.1.

However, lawmakers in the lower house recently urged the IC to suspend the increase as it would just add to inflationary pressures.

As to when it will be lifted and implemented, Funa said it would “depend on whether concerns have already been clarified, specifically, whether questions coming from Congress will be satisfied.”

“There is a need to ventilate the concerns arising from the revised schedule of minimum catastrophe rates considering the expected increase of insurance premiums and its possible impact to the policy holders,” he said.

It was in 2006 when the premium for disaster insurance was last adjusted.

The supposed increase stemmed from the Memorandum of Understanding among the IC, the Philippine lnsurers and Reinsurers Association lnc., and the National Reinsurance Corp. of the Philippines for the implementation of the Philippine Catastrophe lnsurance Facility (PCIF).

The MOU provides that the general framework of the PCIF shall include the review of the current catastrophe insurance rates and rating structure to one that is more risk-appropriate and sustainable.

The parties earlier said there was a need to phase the implementation of the rate adjustments to allow the market to adjust over time and to cushion the impact of such rates.