More foreign companies are likely to enter the insurance market in the Philippines as the deadline looms for the final tranche of required capital increases -- a move that would impact small local insurers.
The Philippine Insurers and Reinsurers Association (PIRA), the umbrella organization representing the interests of the non-life insurance industry in the country, said a number of foreign firms had expressed interest in entering the Philippines, reported The Philippine Star.
“We were approached by Koreans for M&As. They represent Koreans, Thai, and Japanese capital,” PIRA executive director Michael Rellosa told The Star.
Under the Insurance Code, existing insurers must have a net worth of at least PHP1.3bn ($23.3m) by 31 December this year from the current required minimum level of PHP900m.
Unfortunately, not all insurers will be able to comply with the PHP1.3bn requirement, especially as the COVID-19 pandemic trimmed the net worth of insurance companies in the past two years.
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.
Mr. Rellosa said the number of PIRA’s members is down to 56 at present from 130 and this could be slashed further to around 40 by next year.