By Ted P. Torres (The Philippine Star) Updated March 20, 2012 12:00 AM
MANILA, Philippines - Composite insurance firms as well as
microinsurance-oriented insurers are likewise affected by the proposed
increase in minimum paid up capital.
The proposed order increases the capital level for composite license
holders to P2 billion from the existing P250 million, plus an additional
P100 million as contributed surplus.
A composite license is issued to a company that sells both life and
non-life insurance policies under one roof.
There are four composite license holders based on data lifted from the
Insurance Commission (IC). These are: the AsianLife and General
Assurance Corp. (ALGA), Climbs Life and General Insurance Cooperative,
Paramount Life and General Insurance Corp. (Paramount Life), and the
Philippine American Life and General Insurance Co. (Philam Life).
Also affected are companies that issue microinsurance products or sell
insurance products that fall under the definition of microinsurance "as
defined under Insurance Memorandum Circular (MC) 9-2006 and 1-2010, and
obtaining direct premiums on microinsurance products amounting to at
least 50 percent of its aggregate direct premiums on all its lines of
business."
Affected are life and non-life insurance companies that market
microinsurance, as well as 20 licensed mutual benefit associations
(MBAs) and cooperative insurance societies. The proposed paid up capital
requirement is P500 million.
Meanwhile, the draft order states that a mutual insurance company must
also "have available cash assets of the same amount as the paid up
capital of an insurance company."
It is basically referring to the Insular Life Assurance Co. (Insular
Life), the only mutual insurance company in the Philippines.
The existing regulations regarding the capitalization of the industry –
DO 27-06 – will expire at the end of 2012. By then, the minimum paid up
capital requirement will be pegged at P250 million.
"It was already delayed by one year," Dooc said in the public hearing
last Thursday at the IC headquarters. A second public hearing is
scheduled on March 22 after which the position papers will be
consolidated with a separate position or comment by the commission.
It will in turn be presented to Finance Secretary Cesar V. Purisima for
final comment. "That should result in the DO but we would be inviting
the industry representatives to join us (IC) in making the
presentation," the IC head said, hinting that the new DO would be
released "sooner-than-later."
The draft DO increases the minimum paid up capital from P250 million to
P1 billion by end 2016. Or a staggered increase of from P250 million end
2012 to P450 million the following year. Then it will be increased to
P625 million by end 2014, P800 million in end 2015, and finally to P1
billion by December 2016.
Published IC data as of 2010 shows that PhilamLife already have paid up
capital worth P1.9 billion. The next nine players have capital of over
P350 million, and the next 10 players reflecting an average of P250 million.
The top 10 life insurers already account for over 80 percent of the
business.
In 2010, the minimum paid up capital required by DO 27-06 was P125 million.
The IC data for the 86-strong non-life insurance industry show that
Malayan Insurance Co. with a paid up capital of P845 million, and the
next four with an average capital of over P550 million. From the next 40
it averages at P125 million.
The top 30 non-life insurers also account for 80 percent of that
segment's business.
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