HMOs, insurers undertaking study on morbidity

MANILA, Philippines — A morbidity study among health maintenance organizations (HMOs) and insurance firms is underway in order to assess current market rates and capitalization requirements.

In a statement, the Insurance Commission said it inked a memorandum of agreement with the Actuarial Society of the Philippines (ASP) to conduct the first industry-wide morbidity study aimed at evaluating rates and reserve valuations of insurers.

The study will be based on the claims experience of HMOs and insurance firms.

IC commissioner Reynaldo Regalado said the study also aims to come up with benchmarks for evaluating the reasonableness of premium rates, reserve valuations, and capitalization requirements of companies.

“The study will not only promote a sound health insurance and HMO market, but also encourage product innovation and attract foreign investments,” Regalado said.

“It aims to bridge the health protection gap among Filipinos and enhance financial inclusion,” he said.

Other areas for cooperation between IC and ASP include technical cooperation on revising standards on risk-based capitalization, valuation and product pricing.

ASP is primarily engaged in determining the chances of future risks, like birth, disability, accidental injury, fire, damage to property, need for medical care, or premature death, and calculate the cost of financing these uncertain events by insurance or other related means.

In the Philippines, actuaries have traditionally practiced their profession in the life insurance industry.

The net income of the insurance sector went up by 9.38 percent to P38.28 billion in January to September 2023, attributed to the increase in premium collection by both life and non-life insurance companies.

On the other hand, the HMO industry suffered a higher net loss of P2.15 billion in the same period as benefits and claims released jumped by 28 percent to P40.92 billion.

The financial condition of several HMOs was heavily impacted by the 2022 loss and the continuing increase in health care costs last year.