Insurers have raised their plea for the government to forego implementing the next and final tranche of an increase in the industry’s capital requirements by the end of 2022.
The Philippine Insurers and Reinsurers Association (PIRA) chairman Allan Santos told Philippine Star that the umbrella group for general insurers was coordinating with its counterpart in the life insurance industry on the matter.
He said, “At this stage, PIRA is in discussions with the Philippine Life Insurance Association (PLIA) to come up with a common position on the issue.”
PLIA president Benedict Sison, in a separate e-mail, said both industry groups are planning to approach this concern jointly to deliver a stronger message to regulators on behalf of vulnerable industry players.
Earlier, Insurance Commissioner Dennis Funa said regulators had already scrapped a proposal to stop the hike in capital requirements under the Insurance Code. The law states that existing insurers must have a net worth of at least PHP1.3bn ($27m) by 31 December, a PHP40m increase from the end-2019 minimum capital requirement of PHP900m.
PIRA maintains that increasing the net worth requirement was unnecessary, as the move could end up hindering competition within the industry and increasing the cost of insurance in the country.
“Risk-based capital requirements and regulations have already been put in place by the Insurance Commission and we believe that such regulatory framework, together with the current minimum capital requirements, will be sufficient to protect the solvency of non-life insurance companies and the interests of the insuring public that the insurance companies will be there and able to pay their claims when they become due,” Mr Santos said.
Mr Sison, for his part, says that some insurance companies may have difficulties in increasing their net worth given the impact of the COVID-19 pandemic.