THE INSURANCE Commission (IC) has set a transition period for mutual benefit associations’ (MBA) adoption of the new financial reporting and risk-based capital frameworks and reserve valuation standards.

“To assess the quantitative impact of the new regulatory frameworks, the MBAs shall be subject to a transition period for the conduct of parallel runs on the adoption of the new Financial Reporting Framework, valuation of policy reserves, and the Risk-Based Capital (RBC) Framework,” the IC said in a circular dated July 28.

Based on the schedule, MBAs will have to submit by Oct. 30 the regulatory requirements covering periods with cut-off dates as of Dec. 31, 2024 and as of June 30, 2025.

Meanwhile, all requirements for the period ending Dec. 31, 2025 will need to be turned in by June 30, 2026.

IC Circular Letter (CL) No. 2022-24 dated May 19, 2022 prescribed the new Financial Reporting Framework for MBAs, which aligned the economic valuation of assets and liabilities with international accounting and actuarial standards, as well as core insurance principles.

Under these guidelines, MBAs were required to use the new framework in their standard chart of accounts, which shall be in accordance with the current Philippine Financial Reporting Standards (PFRS), starting this year.

Meanwhile, CL No. 2025-12 dated May 15, 2025 provided the updated valuation standards for MBAs, requiring that policy reserves for both basic and optional life insurance coverages be determined at the end of each valuation period.

Policy reserves are dues that MBAs are required to collect from its members, which are used for the payment of claims or obligations. Under the circular, MBAs are required to compute their required reserves using gross premium valuation.

Lastly, CL No. 2025-15 dated July 28 introduced the amended Risk-Based Capital Framework for MBAs, incorporating new accounts and their corresponding RBC factors, ensuring alignment and consistency with the updated reporting standards.

The latest circular amends guidelines issued in 2006.

The MBA sector’s total contributions or premiums rose by 2.89% year on year to P3.99 billion as of end-March, latest IC data showed.

The industry’s net income grew by 7.09% year on year to P15.3 billion in the first quarter. — AMCS

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