Suspension of hike in disaster premium temporary – Insurance Commission

MANILA, Philippines — The Insurance Commission (IC) said the suspension of the premium increase on catastrophe insurance is just temporary, pending public consultations.

In its latest advisory to non-life insurance and reinsurance? companies and licensed intermediaries in the Philippines, the IC said the setting aside of the adoption of the revised schedule of minimum catastrophe rates issued last December is temporary in nature.

“This temporary suspension shall be without prejudice to ‘further appropriate action on the matter’ that may be undertaken by the IC,” IC commissioner Dennis Funa said.

“This just delays the implementation of the regulatory action (on the disaster premium hike) to allow for the necessary public consultations to take place,” he said.

Funa further emphasized that the deadline for meeting the requirement set forth for non-life insurance and reinsurance companies to adopt revised minimum rates for catastrophe risk insurance would be established upon completion of the public consultations.

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 in July 2022.

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

The temporary suspension of the measure came after lawmakers urged the IC to do so as such an increase would just add to further inflationary pressures.

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 is 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.