Home Banking & Finance IC streamlines rules on HMO security deposit requirement
IC streamlines rules on HMO security deposit requirement
HEALTH MAINTENANCE organizations (HMOs) will have to invest security deposits in government entities starting this year, as mandated by the Insurance Commission (IC).
The deposits will be worth “not less than 25% of the actual paid-up capital” or P5 million, “whichever is higher,” the IC said.
In a circular dated Dec. 27, 2019 which took effect on Jan. 1, Insurance Commissioner Dennis B. Funa said all HMOs have until Jan. 31 to comply with the requirements for security deposits.
“This circular shall be used to protect the interests of the HMOs’ enrolled members and to assure continuation of health care services to them,” Mr. Funa said.
The circular clarified that security deposits can only be invested in bonds or debt instruments of the government, including those of government-owned corporations. It particularly cited those that are under the Bangko Sentral ng Pilipinas.
It added that security deposits will be exempt from legal claims such as lien and encumbrance. It will also be under the non-tradable account of the National Registry of Scripless Securities System.
In cases of replacement or withdrawal of deposits, HMOs will be required to secure prior written approval from IC subject to the agreement that the deposits will be returned within five working days from their release.
According to the IC, security deposits are counted under assets of HMOs “in the determination of its unimpaired paid-up capital and net worth requirement.” — L.W.T. Noble