INDUSTRY LEADERS urged the Insurance Commission (IC) anew to postpone the mandated increase in their minimum capital set for this year’s end, saying many companies are still far from meeting the higher requirement.
Philippine Insurers and Reinsurers Association (PIRA) Chairman Edgardo D. Rosario and Etiqa Philippines Chief Executive Officer (CEO) and Philippine Life Insurers Association President (PLIA) Rico T. Bautista urged the regulator to delay the increase.
“It is the industry’s view that proceeding with the P1.3-billion level would make us disproportionately overcapitalized relative to our market size, as compared with our Association of Southeast Asian Nations counterparts,” PLIA’s Mr. Bautista said during the Second Virtual Philippine Insurance Summit being held on June 23 and 24.
Insurance companies’ minimum capital requirement was increased to P900 million at the end of 2019 from P550 million and will increase further to P1.3 billion by end-2022, according to the Insurance Code.
Mr. Bautista said 12 companies or 38% of the insurance industry are at risk of being unable to meet this requirement.
Of these twelve companies, four are still about P75 million to P133 million away from meeting the P1.3-billion requirement, four have about P137 million to P198 million to go, while the other four are P275 million to P488 million short.
Mr. Bautista added that the funds to be used by insurers to meet the higher requirement could instead have been used on their digital transformation efforts.
Meanwhile, PIRA’s Mr. Rosario said he is cautiously optimistic on the outlook for the Philippine insurance sector amid lingering uncertainties in the global economy.
“It is definitely a challenge, but the thing is, the need for insurance will not go away,” he said. “We might not grow as much as we’d like to, because of price pressures and things like that.”
Mr. Rosario noted that insurance remains low in the list of needs and wants of Filipinos as the basic necessities continue to be the priority.
DECLINE IN AGENTS
Meanwhile, PLIA’s Mr. Bautista also urged the IC to increase its online testing capacity.
He said that the pandemic has caused the number of IC’s financial agent examinations to decrease, resulting in fewer new agents, and consequently, lower New Business Annual Premium Equivalent, the sales measure used for insurance companies.
“The online agent facility, as it is currently, can accommodate only 150 examinees per day,” Mr. Bautista said.
“Imagine the cost efficiency that will result to if you need not have actual IC employees proctoring online examinations, and you can multiply the number of exams you can conduct,” PLIA Data Protection Officer George C. Mina added.
The insurance industry posted growth in premiums, income and benefits paid in 2021, data from the IC showed.
Life, nonlife insurers’ and and mutual benefit associations’ total premium income was at P374.67 billion in 2021, up by 21.55% from P308.25 billion in 2020, IC data showed. — TJT