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Regulator clarifies cooperative insurers' capital requirements

A new cooperative insurance company shall be allowed to carry out insurance business and be licensed as such if it has a paid-up capital of at least 50% of what is required under the Amended lnsurance Code and subsequent amendments thereto, says the insurance regulator in a circular.

The Insurance Commission (IC) notes that currently, the Amended lnsurance Code does not expressly provide for the minimum paid-up capital and the minimum net worth requirements for cooperative insurance companies.

It published the circular because “there is a need to clarify the provision of the Amended lnsurance Code insofar as the minimum paid-up capital and minimum net worth requirements for insurance cooperatives are concerned”. The circular took effect from the date of its publication, which was 19 October 2021.

Prior to the clarification, the regulations required an insurance cooperative to have a minimum paid-up capitalisation of at least PHP125m ($2.46m).

However, the IC says that the requirements on capitalisation may be liberally modified "but in no case may the requirements be reduced to less than half of those provided by rules, regulations, or laws".

The IC's circular also says that a new cooperative insurance company's minimum paid-up capital must remain unimpaired but shall subsequently follow the minimum net worth requirement for existing cooperative insurance companies for the continuance of the license.

Existing cooperative insurers

The IC says that for an existing cooperative insurance company, the minimum net worth shall be as shown in the schedule below:


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