IC optimistic Code changes will be approved next year
AMENDMENTS to the Insurance Code could be passed into law by next year, but capitalization remains one of the major sticking points.
“I think the Insurance Code could be passed before Congress ends its session next June,” Insurance Commissioner Emmanuel F. Dooc said at the sidelines of budget deliberations at the House of Representatives late Monday.
Capitalization, however, divides industry players, legislators and the regulator, he said.
“The Department of Finance is pushing for paid-up capital requirements of anywhere between P500 million to P1 billion,” Mr. Dooc said.
This would be significantly higher than the scheduled P125 million this year, to rise to P250 million by 2013.
The Department of Finance is “not happy with the current level,” Mr. Dooc revealed.
The paid-up capital requirements of the Philippines are the lowest in the region, and a hike would ensure that local insurers can compete against their Asian counterparts, he said.
A higher capitalization gains more importance as the country lowers its trade barriers as a member of the Association of Southeast Asian Nations by 2015, and allow the free trade of financial services, Mr. Dooc added.
“The increased capitalization will be good for the insurers because it will ensure their solvency and the continued protection of policyholders,” he explained.
The insurance chief admitted, though, that smaller insurers might not be able comply with a steep increase in paid-up capital requirements.
As a result, the industry could see some consolidation.
House Bill No. 4867, sponsored Leyte Rep. Sergio F. Apostol and Surigao del Norte Rep. Guillermo A. Romarate, Jr., which proposes changes to the Insurance Code, has already been approved at the committee level at the House of Representatives and is up for plenary debates.
At the Senate, two corresponding bills -- Senate Bill No. 53 authored by Sen. Edgardo J. Angara and Senate Bill No. 2500 authored by Sen. Sergio R. Osmeña III -- are pending at the banks, financial institutions and currencies committee.
Other sticking points in HB 4867 are a proposal to grant the Insurance Commission (IC) the authority to adjudicate disputes involving claims of up to P1 million, up from the current cap of P100,000, Mr. Dooc said.
“With this amendment, policyholders will no longer have to bring their case to court and spend on lawyers and filing fees. They can expect faster resolution too,” he explained, adding that the IC will also hire more lawyers if the provision is approved.
The liberalization of investable instruments for insurers could also raise some concerns, but Mr. Dooc assured the IC has studied these options to ensure they are safe.
Insurers have long complained that the outdated Insurance Code, passed in 1974, prohibits them from putting their money in new financial instruments, limiting their investment returns.
The IC is also pushing for a fixed term of six years for the Insurance Commissioner. There is no period prescribed right now.
Capitalization, however, divides industry players, legislators and the regulator, he said.
“The Department of Finance is pushing for paid-up capital requirements of anywhere between P500 million to P1 billion,” Mr. Dooc said.
This would be significantly higher than the scheduled P125 million this year, to rise to P250 million by 2013.
The Department of Finance is “not happy with the current level,” Mr. Dooc revealed.
The paid-up capital requirements of the Philippines are the lowest in the region, and a hike would ensure that local insurers can compete against their Asian counterparts, he said.
A higher capitalization gains more importance as the country lowers its trade barriers as a member of the Association of Southeast Asian Nations by 2015, and allow the free trade of financial services, Mr. Dooc added.
“The increased capitalization will be good for the insurers because it will ensure their solvency and the continued protection of policyholders,” he explained.
The insurance chief admitted, though, that smaller insurers might not be able comply with a steep increase in paid-up capital requirements.
As a result, the industry could see some consolidation.
House Bill No. 4867, sponsored Leyte Rep. Sergio F. Apostol and Surigao del Norte Rep. Guillermo A. Romarate, Jr., which proposes changes to the Insurance Code, has already been approved at the committee level at the House of Representatives and is up for plenary debates.
At the Senate, two corresponding bills -- Senate Bill No. 53 authored by Sen. Edgardo J. Angara and Senate Bill No. 2500 authored by Sen. Sergio R. Osmeña III -- are pending at the banks, financial institutions and currencies committee.
Other sticking points in HB 4867 are a proposal to grant the Insurance Commission (IC) the authority to adjudicate disputes involving claims of up to P1 million, up from the current cap of P100,000, Mr. Dooc said.
“With this amendment, policyholders will no longer have to bring their case to court and spend on lawyers and filing fees. They can expect faster resolution too,” he explained, adding that the IC will also hire more lawyers if the provision is approved.
The liberalization of investable instruments for insurers could also raise some concerns, but Mr. Dooc assured the IC has studied these options to ensure they are safe.
Insurers have long complained that the outdated Insurance Code, passed in 1974, prohibits them from putting their money in new financial instruments, limiting their investment returns.
The IC is also pushing for a fixed term of six years for the Insurance Commissioner. There is no period prescribed right now.
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