Only eight of 34 life insurance companies in the country have so far given their support to the Insurance Commission proposal to the Department of Finance requiring insurers to build-up their capital to P1 billion by 2016.
In a letter to IC Commissioner Emmanuel Dooc, the Philippine Life Insurance Association (PLIA) asked for additional information justifying the proposed capital build-up for the industry.
PLIA president George Mercado assured that the target increase of minimum paid-up capital of P250 million is achievable by the end of the year.
He said the industry has ample resources to comply with the current capital build-up program mandated by the DOF and the commission.
The PLIA said an internal survey conducted by a committee showed that while 8 insurance firms said they support the P1 billion target by 2016, seven others had various “concerns” and 18 asked the PLIA to form a collective stand for the industry.
The capital build-up program was put in place back in September 2006 and was supposed to end in 2011 but was extended to 2012.
The DOF, in Department Order 27-06, said insurance firms must raise their capital because “stable capital bases reduce insolvency risk and afford better protection for the insuring public.”
It also noted that low capitalization “has hampered the ability of local insurance companies to compete at least with ASEAN and other regional players in this period of economic globalization.”
The DOF also said the country “has one of the lowest capital requirement among Asian countries.”
Only 13% of Filipinos insured Organizers of the 14th Asia Pacific Life Insurance Congress (APLIC), to be hosted by the Philippines in 2013, said "only 13 percent of Filipinos have insurance and this makes them very vulnerable to financial misfortune.”
“The belief perhaps is that in a country where many people hardly even make both ends meet, an insurance policy does not even make it to the list of what are considered essentials,” the APLIC organizers added.
They also cited IC's Dooc as saying that many Filipinos have “doubts about insurance companies, given that in previous years there had been instances of insurance and pre-need companies going bankrupt. This meant that they failed to meet their responsibilities to their clients, undermining confidence in the industry.” — ELR/VS