AMENDMENTS to the country’s Insurance Code should be billed as a priority measure for the 18th Congress in President Duterte’s State of the Nation Address (Sona), if the Insurance Commission were to have its way.
Insurance Commissioner Dennis B. Funa said the IC also submitted its proposed legislative measures to the Department of Finance in line with the directive of the DOF secretary, for possible inclusion in the President’s Sona.
“One of the proposed legislative measures is the proposed amendments to the Insurance Code [Republic Act 10607] to broaden the scope of insurance to include nonindemnity-based products such as parametric insurance products,” Funa told the BusinessMirror through electronic mail.
Non-indemnity insurance products are those that provide coverage for persons or things that have no real replacement value, while indemnity insurance products give policyholders a specific amount of compensation for a loss tied to a replacement.
“Parametric insurance shall be included in the Insurance Code as an alternative to the standard indemnity-based insurance. Parametric insurance will simplify loss determination using new technology and methodology, speed up payment of claims, and provide immediate assistance in case of calamity,” he added.
Parametric insurance is explained to be an insurance product that provides the policyholder a set amount of compensation based on the magnitude of a natural catastrophe like earthquakes, among others.
“The proposed measure will also give the Insurance Commission the power to adopt the risk-based supervision [RBS] framework in the Philippines,” he said.
According to the IC,RBS is a comprehensive, formally structured system that assesses risks within the financial system, giving priority to the resolution of those risks.
“The goal of the RBS is to identify the risk profile of the regulated entities, including the risk that the insurer will be facing in the future and to immediately address it,” he added.
The proposed legislative measure will also provide additional protection to the insuring public through a provision on unclaimed settlement benefits, allowable investment limits and the increase in the security fund, according to the IC.
Last week, insurance industry stakeholders also provided their wish list of the measures that they think President Duterte should include in his Sona on July 22.
The umbrella organizations for the life and nonlife insurance sectors of the country said that they wished the President will touch on the promotion of insurance as mitigation tools in government’s disaster risk reduction, as well as keeping the minimum paid-up capital requirement for insurance players at P900 million, with no further increases.