THE Insurance Commission (IC) expressed hope on Friday that insurance companies in the country can meet the minimum net-worth requirement for this year, which is scheduled to increase to P900 million coming from P550 million in 2016.
Insurance Commissioner Dennis B. Funa told reporters at the sidelines of the celebration of the IC’s 70th Anniversary at the Philippine International Convention Center, “I’m hopeful that all of them will be able to come up with the P900 million.”
Under Republic Act 10607, or the Amended Insurance Code of the Philippines, new insurance industry players are required to have P1 billion in paid-up capital, while existing insurance companies need a paid-up capital of P550 million by December 2016, P900 million by December 2019 and P1.3 billion by December 2022.
Funa pointed out that the IC has to be realistic in terms of the insurance industry meeting this goal, saying that the current net-worth of a number of insurance companies has yet to inch closer to the P900-million target.
“What I’m concerned about are those companies that are still far off from the P900 million [networth]. And the numbers are significant, so there is a sizeable number of insurance companies that are still far from the P900 million,” he added.
Nearly half lagging
Funa explained that around 20 of the 54 nonlife insurance companies in the country still need to increase efforts to meet the P900-million goal.
In order to help the insurance players meet the minimum net-worth requirement this year, the IC had been encouraging the players to work on finding investors and merging.
“Well we are encouraging them to find investors and I think that is what most of them are doing now,” he said.
He said insurance companies have until the first quarter of 2020 to meet the target, as the consolidation of the financial statements of all the insurance companies for a year happens during the first quarter of the succeeding year.
“In the law, it says that by December 31 you have to have P900 million, but in actuality, the net-worth is determined in their financial statements. The financial statements will be reviewed in the first quarter of 2020, so technically they would have until the end of the first quarter of 2020 to comply with the net-worth requirements,” he explained.
In his speech during the IC’s 70th anniversary, Funa said among the most difficult challenges the insurance industry faces today is complying with the statutory and regulatory solvency requirement, specially as regards to minimum net-worth and risk-based capital ratios.
The guest of honor during the event was Senior Associate Justice Antonio T. Carpio. Players from the life, nonlife, mutual benefit associations, preneed and health maintenance organizations, were in attendance.