The Insurance Commission (IC) plans to limit the minimum capital requirement for local insurers at the current level of PHP900m ($17.6m).
This indicates that the insurance regulator would not press on to require insurers to raise their minimum capital to PHP1.3bn by 2022.
In a text message, Insurance Commissioner Dennis Funa said the IC would make a recommendation to Finance Secretary Carlos Dominguez to amend the Insurance Code, particularly in regards to the capitalisation requirement for insurance companies.
“I will recommend to Secretary Dominguez that we stop at PHP900m, meaning, I will suggest that we forego the 2022 increase to PHP1.3bn as stated in the amended Insurance Code,” he said.
Under the current Insurance Code, new players in the industry are required to have PHP1bn in paid-up capital. Existing insurers must have a net worth of at least PHP250m by 30 June 2013; PHP550m by 31 December 2016; PHP900m by 31 December 2019 and PHP1.3bn by 31 December 2022.
Mr Funa said that proceeding with the PHP1.3bn required capital by 2022 would mean the Philippine insurance industry would then have the highest capital requirement for insurance companies within the Southeast Asian region.
The IC’s recommendation came after a review of its policies, that was prompted by lobbying by both life and non-life insurers, reported the Philippine Star.
The president of the Philippine Life Insurance Association, Mr Hans Loozekoot, said that PHP900m should be enough to ensure that the insurance industry is well-capitalised, and that it is at par with other insurers in the region.
In an advisory, Mr Funa reminded all insurance companies in the country to comply with the increase in minimum net worth requirement of PHP900m that took effect on 31 December 2019.