Local insurers will officially be required to increase their capital to a minimum of PHP1.3bn ($23.3m) by the end of this year, as the government will no longer postpone the implementation of the requirement.
Insurance Commission head Dennis Funa said the final tranche of the increase in capital requirement would be executory by the end of the year as scheduled, reported The Philippine Star.
This is despite requests from insurance companies to forgo the increase and maintain the minimum capital at the current level of PHP900m.
“I understand the companies decided to bring this matter to Congress. But I think the effort is too late,” Mr. Funa told The Star.
Not all insurers will be able to comply with the new minimum capital requirement, especially as the COVID-19 pandemic has decreased the net worth of insurance companies in the past two years.
Mr. Funa said the list of compliant insurance firms would be determined by the middle of 2023. This is because the determination of companies’ net worth is based on the submitted annual statements that are due by end-April next year.
A new insurance code was signed into law in the Philippines in 2013 under which capital requirements for insurers were increased every three years until 2022. The required net worth was PHP250m in 2013, PHP550m in 2016, PHP900m in 2019, and PHP1.3bn in 2022. This move has led to consolidation in the insurance market.
Source: asiainsurancereview.com