IC commissioner Evangeline C. Escobillo said her office will require at least P100 million capitalization and net-worth requirement for all operating life and non-life insurance companies in the Philippines.
Currently, the requirement is only pegged at P50 million, Escobillo said pushing that the increased capitalization would allow impressive strength of the industry, and recover the weak market impression of insurance products.
However, she clarified that the P100 million requirement will be implemented only for big companies which carry several products, and operating in different areas in the country.
She said smaller insurance firms, with limited number of branches will be required less than P100 million, depending on the size.
In her recent visit to Cebu, the lady commissioner said that there are a lot of things the Commission has to push starting this year especially that the insurance industry in the Philippines is undergoing a challenging situation.
Because of some Insurance companies' problems in the last few years, including the financial problems of some pre-need insurance companies, that affected a number of premium holders, the entire insurance industry in the Philippines is experiencing a slow pace growth, as the market is getting apprehensive and critical on the insurance investments.
In 2007, Escobillo said IC aims to again increase the capitalization requirement to P200 million, and another P100 million additional in the following year.
"We need to do it [increased of capitalization], in order to improve the image of the industry," she said emphasizing that this is one of the tools that would bring back the confidence of the market ensuring the full financial back up of the insurance companies.
She added that the Commission now is doing a lot of internal changes to allow an improved insurance industry, which for so many years have been experiencing difficult growth performance.
"There's a need for the agency [IC] to be empowered, just like the Bangko Sentral Ng Pilipinas. We are now implementing a full computerization of the agency, and spending for higher technically-able people," she said.
Only about 10 percent to 15 percent of the over 80 million Filipinos are now getting insurance premiums both life and non-life. According to Escobillo this has to be pulled up, and Filipinos must regain the confidence of the insurance companies.
The target she said is to have at least 20 percent of all Filipinos be insured in 2007, and 40 percent in 2010.
For the government side, she said something should be done in some of the provisions of the current insurance code. She mentioned that one of the concerns why insurance companies have difficulties in taking off to attract the market, because the rates are quite unattractive due heavy taxation imposed by the government to insurance firms.