IC seeks fresh amendments to Insurance Code
The Insurance Commission (IC) is seeking fresh amendments to the six-year-old Amended Insurance Code to fill the gaps in regulating insurers’ fast-changing business models.
Insurance Commissioner Dennis Funa told the Inquirer last week that the IC would pitch to Congress by the middle or latter part of next year the further amendments to Republic Act No. 10607, which took effect in 2013.
In the meantime, industry groups such as the Philippine Life Insurance Association (PLIA), composed of life insurers, and the Philippine Insurers and Reinsurers Association, which groups nonlife players, will also make inputs in the IC’s proposal, Funa added.
Based on preliminary documents of an IC technical working group obtained by the Inquirer, the proposed amendments to RA 10607 included new rules on agri-insurance as well Islamic, catastrophe and parametric insurance.
At present, the Philippines does not have guidelines covering Islamic insurance called “takaful,” but a number of players had already expressed interest to introduce it here as soon as rules were in place.
The IC was also supporting covering risks from contingent events through parametric insurance, extreme or exceptional events through catastrophe insurance, as well as protection of farmers against damages or losses to crops and livestock.
Also, the IC is looking into regulating mandatory insurance such as those covering overseas Filipino workers (OFWs), compulsory third party liability, machinery, and Pag-Ibig Fund/Home Development Mutual Fund.
The IC also wants to establish an insurance guarantee corporation alongside separate guaranty companies for the life, nonlife and takaful sectors.
In terms of capitalization, the IC will propose to keep the P1-billion net worth requirement by end-2022, on top of at least P100 million in cash of stockholders’ contributed surplus fund as a prelicensing requirement to new entrants.
After 2022, the IC is looking into adopting risk-based supervision and a periodic review on the insurance industry’s capital structure to be led by the Office of the President and economic agencies, which besides the IC included the Department of Finance, the National Economic and Development Authority, and the Securities and Exchange Commission, among others.
For the mutual benefit association sector, the IC was eyeing a capital investment requirement, alongside higher capitalization for those engaged in disaster, marine and suretyship.
The IC will likewise seek immunity from suit such as temporary restraining orders and other legal proceedings in the conduct of its work as regulator and for its employees, similar to that currently being enjoyed by the Bangko Sentral ng Pilipinas (BSP).
The IC wanted reorganization with a “compensation plan comparable with the prevailing compensation plan of the BSP and other government financial institutions or government-owned and/or controlled corporations (GOCCs).”
As regulator, the IC is eyeing to audit GOCCs engaged in social insurance, such as the Government Service Insurance System, Social Security System, Philippine Health Insurance Corp., Philippine Crop Insurance Corp., the consolidated Philippine Guarantee Corp., and Pag-Ibig.
The IC will also pitch the establishment of a separate government entity that will handle the liquidation of distressed insurers.
The proposed amendments likewise included a supervisory framework to enforce and monitor insurance companies’ compliance to antifraud regulations; public disclosure requirements for insurance firms, and development of reinsurance regulations.