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The Puzzles We Are Solving - 2019 Chairman's Report

The year 2019 is shaping up to be a banner year for our industry. Figures released by the Insurance Commission (IC) in August showed that for the first half of the year, the non-life insurance sector already registered a 12-percent increase in gross premiums. The IC expects this growth to hold up for the remainder of the year as all economic indicators point to an upward trajectory. The fourth quarter though was hit by several large loss events such as the Star City fire, the Mindanao earthquakes and the recent Typhoon Tisoy.

I have been reflecting on the challenges that we face in the industry, and I observed that many of them have been present for many years already. They seem to be like giant jigsaw puzzles that take a long time to solve. And when we think that we are already about to solve a puzzle, we realize that there are still some missing pieces.

One thing is clear, however. These puzzles can be solved. We will find the missing parts one piece at a time and complete these puzzles eventually. The important thing is we’re getting closer to solving them.

I identified six main puzzles that we’ve been working on all these years, and in this report, I will give updates on what we have accomplished in 2019 towards solving them.


The first puzzle that we’ve been trying to solve is how to influence regulation and taxation to support our industry and our customers. In 2019, we worked on several initiatives that fall under this puzzle, namely, 1) Insurance tax reduction; 2) Non-admitted Assets; 3) IFRS17; 4) Allowed investments by insurance companies; 5) Insurance Code amendments; and 6) Participation in regulatory reviews and industry groups such as the ASEAN Insurance Council Meetings.

We all know that insurance did not make it to the Tax Reform for Acceleration or Inclusion or simply TRAIN law. Nevertheless, we continued our bid for lower taxes on non-life insurance products in the next phases of this TRAIN law. So far, the proposal to reduce documentary stamp taxes by 1% each year for the next five years is now in both the upper and lower house versions of the TRAIN Law Package 4 bill.

On Non-Admitted Assets, we’ve achieved several concessions from the IC on admissible assets. The remaining ones in discussion are the admissibility of installment premiums and prepaid taxes.

The IC also heeded our call to defer the implementation of IFRS 17 to January 2023 in view of the complexity of this new accounting standard. On top of this, our Finance Committee has also convinced the IC to expand the list of investments of insurance companies. Our Finance Committee plans to meet and partner with banks to develop a scope of possible investment for insurance companies.

Together with the IC and the Philippine Life Insurance Association (PLIA), we are working on fresh amendments to the Insurance Code, including keeping the minimum capital requirement at 900 million pesos, which the IC is supportive of.

Also included in this puzzle of influencing regulation is our participation in regulatory review activities of the World Bank and the Development Academy of the Philippines. Both agencies are doing reviews of the regulations affecting the insurance industry, looking into ways to make regulation more effective, efficient and inclusive.

We also regularly provide inputs to lawmakers particularly in the area of environmental protection. For example, we gave input to the Senate on their proposed bill to introduce a Mandatory Environment Insurance to protect our natural resources.

And lastly, we actively participate in the ASEAN Insurance Council (AIC), which is composed of all the insurance associations in the ASEAN countries. The AIC promotes the development of insurance in the region and helps regulators to harmonize insurance regulation within ASEAN. In this regard, we are proud to note that we have been elected to chair two of the four committees of the AIC. The Reinsurance Working Committee is chaired by myself while the Education Committee is chaired by our PIRA Executive Director, Mr. Michael Rellosa. You may also be excited to know that the annual AIC and regulators meetings will be held here in the Philippines next year. The event will be jointly organized by PIRA, PLIA and the IC.


The second puzzle we’re trying to piece together in PIRA is supporting the healthy development of our industry and our member companies. As industry leaders, our members look to us for direction and guidance. This is the reason why we have different committees in PIRA that work on specific concerns. Allow me to acknowledge some of their efforts.

Our Finance Committee has been working tirelessly to help our members transition to IFRS 17. They have collaborated with Price Waterhouse Cooper for a series of seminars and for an industry-wide impact assessment.

Our Motor Car and IT Committees, meanwhile, have worked hard in improving our COCAF system or the Certificate of Cover Authenticating Facility. The system’s linkages with those of the Insurance Commission and the Land Transportation Office have been enhanced. These Committees also organized a system penetration testing to ensure that our COCAF system is secure.

The Motor Car Committee also reviewed the industry’s Motor Car Premium Rates to address the changing times. Rate increases that go with certain benefit increases have been proposed to the Insurance Commission.

Our Legal Committee and the technical working group on Standard Wordings and Clauses have been introducing and revising standard clauses for various lines. In addition, the Standard Broker’s Agreement, which was drafted as early as last year, is close to finalization with the IC. The Legal Committee also led the discussions on the landmark RCTPL case which has been appealed to the Supreme Court already.

There is also a growing clamor from our members for PIRA to step up in its role as a Rating Organization to address predatory pricing that leads to cut-throat competition in the industry. We have discussed this with the Insurance Commission, and the IC has made our Technical Committee a part of its Technical Working Group on Risk Evaluation, Pricing and Rating. This TWG reviews the rates and pricing for Motor, Fire and Surety, and it has already issued a circular outlining the revised rules and regulations for the issuance of bonds and is now reviewing the revised premium rates schedule for Motor Car.

These are some of the tangible benefits of being a member of PIRA. The agreements we forge with other industries shorten our learning curve when it comes to technical matters. The systems, the rates and the wordings and clauses – they all reduce the guess work and add certainty to our everyday dealings. PIRA therefore helps minimize the headaches that we will have if we do all the tasks on our own.


The third puzzle is about promoting insurance awareness and education to the general public. We all know that insurance is not as sexy as banking or investments, and whenever we talk about insurance, people get bored or avoid the topic. This puzzle, therefore, is not easy and the bulk of the work in solving it is borne by our Education and Public Relations Committees.

For this year, we came up with our initial season of PIRA TV, an Internet TV show discussing the benefits of insurance and giving tips on how to make the most of them. We hope to continue this initiative in 2020 and potentially expand it to include a podcast that we can listen to in Spotify while we drive to and from work.

This year, we also continued reaching out to universities to promote insurance as a career. We were able to go to New Era University and to De La Salle University where we also promoted the SUITS or the Select Universities Insurance Training Scholarship Program of the IIAP. I am proud to say that the SUITS Program just graduated its fifth batch – this time with seven management trainees all hired on the spot by several insurance companies or brokers.

Another very promising initiative is our discussions with the Department of Education to include Risk Management and Insurance in the Senior High School curriculum. Our Executive Director Mitch Rellosa and our Trustee Butch Rosario met with the DepEd officials on this and they received assurance that this move is aligned with the DepEd’s thrust to promote resiliency to its teachers and students. This will be pursued as a priority in 2020.

Meanwhile, our annual observance of the Insurance Consciousness Week in October had a fresh element – the awarding of free accident insurance to traffic enforcers of the Metro Manila Development Authority or MMDA. The event also featured the signing of a Memorandum of Understanding between PIRA and FinTech Philippines to help our industry leverage the use of technology.

PIRA also once again supported the annual Philippine Insurance Summit last April and mounted a very successful Philippine InsurTech Conference in September. Through these events, we provide our members access to new insights from both local and foreign participants.

And finally, this year saw the launch of three books. Our former Chairman Dr. Jun Benedicto launched his second book “The Business Insurance and Risk Management” as an official PIRA publication. Our Surety Committee also launched the “Surety Case Digest” which contains landmark court rulings related to bonds. And thirdly, PIRA released its Code of Ethics booklet that lists up all the things required of us as insurance professionals and members of PIRA.


Now we go to the fourth puzzle: Advocating disaster resiliency and financial inclusion through government and industry cooperation.

PIRA’s Technical Committee is very much involved in ongoing discussions to develop the Philippine Catastrophe Insurance Pool or Facility. The IC has created a Technical Working Group for this as it sees the importance of a mechanism that will increase our country’s resilience against the impact of natural disasters. Initial talks are focusing on the proposal for cessions of a specified proportion of all catastrophe risks to the CAT Pool which will distribute the risks to subscribing authorized insurers by way of reinsurance in accordance with their risk appetites.

On crop insurance, our technical experts are also very much involved in the agriculture insurance pilot project of the Philippine Crop Insurance Corporation with assistance from the Asian Development Bank.

Lastly, PIRA is also collaborating with the German International Cooperation or GIZ-funded initiative to promote Climate Risk Insurance for the poor. The project is participated by various government agencies and the national task force, where PIRA is a member, is chaired by the Philippines’ national treasurer.


The fifth puzzle involves strengthening PIRA’s role and governance, thereby creating a positive image for the non-life insurance industry.

In 2019, we continued to address this by revising PIRA’s bylaws, developing and publishing an industry Code of Ethics, overhauling our website, and conducting a Trust Survey among our members.

Our new bylaws have been formally approved by the Securities and Exchange Commission, and I believe that in 2020, we can take our discussions further to establish our direction on whether or not to become an SRO. As a precursor to this, we have commissioned a professor from La Salle to do a Trust Survey on our members since we know that if we agree to pursue becoming an SRO, we need to have the full trust and confidence of our members. The objective of this Trust Survey is to hear our members’ thoughts about our association – if they think PIRA fulfills its roles and how it can further improve.

This Trust Survey has already started this month, so I guess some of you have been approached already for interviews. We will greatly appreciate your support and utmost cooperation on this. We expect the results to be presented by the second quarter of next year.


And finally, our sixth and final puzzle is about fostering unity, goodwill and camaraderie among our members. For this we organized the 6th PIRA Networking Golf Tournament at The Riviera. The feedback we received from players and sponsors were overwhelming. Many are already asking us if we could organize this tournament more than once a year.

But fostering unity, goodwill and camaraderie will not be achieved through a mere golf tournament. We must come up with ways to communicate better and work together as one industry association, with a genuine concern for the common good not for just for our own.

For me, this sixth puzzle serves as a prerequisite in solving the other ones. Without unity, goodwill and camaraderie, our efforts in solving the other five puzzles would be futile. But by solving this puzzle, all the other puzzles would be easier to solve. Because by then, we will be thinking and working as one.

On behalf of the PIRA Board of Trustees, I’d like to thank you for your continued efforts and support to PIRA and the industry. Congratulations to your achievements in 2019 and I wish you even greater success in 2020!

by Allan R. Santos, Chairman, Philippine Insurers and Reinsurers Association (PIRA)

View the full report here.


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