WHAT: Philippines BBL Building Resilience using the GeoRiskPH WHO: with DOST Usec. Renato Solidum WHEN: NOVEMBER 26, 4:00-5:30pm

LINK: https://youtu.be/045kSCdHU68

When: Nov 19, 2020 01:00 PM PHILIPPINE TIME ​ Register in advance for this meeting: https://us02web.zoom.us/j/83803721338 pwd=ZjVvUE1maFI5c2NRcm9iTVgwNXBMdz09 After registering, you will receive a confirmation email containing information about joining the meeting.

THE recent decision of the Department of Finance(DoF) not to cap the minimum net worth requirement of insurers at Php900 million will likely cause a further reduction of the Filipino-owned insurers. The next increase of capital is mandated at Php1.3 billion which means an additional infusion of Php400 million to meet the final requirement of Republic Act No. 10607.  In other words, all insurers are given two years to comply before December 31, 2022. The Insurance Commission report of 2019 disclosed that only 48 of the 58 non-life insurers were Filipino-owned.  The report also clearly shows that 28 Filipino insurers could not meet the capital increase of Php900 million. On the life sector composed of 30 insurers, only twoFilipino companies did not meet the Php900-million requirement. Another revelation was that of the 57 insurers, only 26 non-life insurers produced more than Php900 million in premium whilst 31 Filipino-owned companies made much less. The impact of the COVID-19 pandemic has caused a slowdown of business opportunities such that the insurers will have a difficult time in raising the Php400 million to meet the Php1.3 billion paid up capital. It is therefore expected that there may be again a reduction in the number of Filipino insurers. With the foregoing as a background, we reiterate the appeal of Filipino insurers for the DoF to appreciate their situation, as there are other ways to create “virtual capital” to expand protection of clients and the insurer, using a reinsurance facility to share risk exposures with reputable and global reinsurance companies. The insurers have access to reinsurance facility support to cover the risk beyond their planned retention, which is limited to 20% of their capitalization. This reinsurance support allows insurers to protect much bigger risks for their valued clients. Based on their past portfolio, insurers can also negotiate with reinsurers for an annual reinsurance treaty for automatic sharing of risks. They can also secure reinsurance support on a case by case basis, a facultative support for one big client at a time. Further, insurers can secure an Excess of Loss(XOL) protection for their annual retained risks, with a manageable deductible share for each and every event loss. This XOL reinsurance facility protects the insurers from excess of loss from their annual aggregate risk exposure. The proper management of these reinsurance support expands the capability of insurers to protect bigger portfolio of their valued clients by sharing the bigger risk exposures with reinsurance partners. These global reinsurers also provide innovative reinsurance solutions. These reinsurance treaties are reviewed and monitored by the Insurance Commission. Our National Reinsurance Corporation provides this local reinsurance support. All other reinsurance companies must be registered locally with a local representative agent. In this respect, we would advocate that local insurers can continue to offer protection for their valued clients by leveraging the reinsurance partnership – like a “virtual capital” to enhance their financial stability. *The author is Editor of Insurance Philippines. REYNALDO A. DE DIOS Link to original post: http://pilipinomirror.com/reinsurance-a-viable-protection-in-lieu-of-increasing-capitalization-of-insurers/

Local insurers in the Philippines will still face significant pressure on underwriting growth and profitability amid the ongoing COVID-19 pandemic with the recent rejection of a proposal to relax minimum capital requirements, says AM Best. A new Best’s Commentary, titled, “Philippine Insurance: Dropped Proposal to Amend Minimum Capital Rule May Have Mixed Impact,” notes that the government has stood firm on the capitalisation requirement, which is to be met by 2022. According to the commentary, the requirement not only prompted capital injections in the market to strengthen the insurers’ capitalisation, but also led to increased merger and acquisition (M&A) activity in Philippines’ highly fragmented insurance market. However, in view of the economic fallout from COVID-19, AM Best notes that there is a possibility that M&A momentum and the impetus to shore up capital positions may falter over the near term. All insurers will need to have a minimum net worth of at least PHP1.3bn ($27m) by 31 December 2022. Many small- and medium-sized companies will need to bolster their capital bases to comply with the increasing minimum net worth requirements, and given the remaining time period, AM Best expects that this will likely be achieved through capital raised with new/ existing shareholders, rather than through internal capital generation. Last month, the government scrapped a proposal to cap the minimum net worth requirement of local insurance players at PHP900m to ensure the financial strength of the industry, according to the Insurance Commission. It will implement minimum capital requirements of PHP1.3bn as was originally planned. By Asia Insurance Review Link to original post: https://www.asiainsurancereview.com/News/ViewNewsLetterArticle/id/74501/Type/eDaily/Philippines-Insurers-face-significant-pressure-on-profits

New tech problems on cybersecurity have come up unnoticed by ordinary users while we are all pre-occupied with the pandemic. As early as July of this year, the Federal Bureau of Investigation in the US and even the IATF here in the country have issued a warning about the increase of cyber attacks that would happen amid the global health crisis. Just recently, the Land Transportation Office of the Phillippines disowned a website that looks like a legit site complete with the agency’s official logo. In a Facebook post, LTO warned users not to give personal information to unverified links and accounts. This made AJ Dumanhug a cybersecurity analyst and Co-Founder of Secuna, a Philippine cybersecurity company curious and checked the website. “I’ve visited the website out of curiosity and it’s currently running. I tried it out and it works well. The website has two main features, Driver’s License Authenticator and Motor Vehicle Authenticator.” Dumanhug said. The Driver’s License Authentication feature will ask for users’ license number and birthday; once the user inputs the needed information and press submit, it would then give the name of the owner of the license and the expiration date. Users of the LTO Facebook page were confused and concerned. If this is not a legitimate LTO site, how come the information that they get when they input their details are correct? As the LTO disowned this site, this is clearly a breach of personally identifiable information of vehicle owners. Check the conversation here https://www.facebook.com/lto.cdmpao/posts/4945108275506974 In AJ Dumanhug’s further research, he found out that the rogue website collecting data from users is just using the API endpoint from lto.net.ph an official webiste of the LTO, to retrieve the information. What’s disturbing is that, upon analyzing, whoever is behind the lisensya.info is saving every successfully validated license and every authenticated motor vehicle. As of 6:07am of November 8 the site has already collected 9,733 driver’s license details and 18,702 MV File Number with complete information. If you have used the website lisensya.info there is a big possibility that you would be a victim of identity theft in the near future. “This is clearly LTO’s fault for not implementing proper rate limitation and security measures in the agency’s API endpoints.” Dumanhug said. Users were also put at risk when the LTO did not properly mask user information and failed to review if all data sent back as a response to a query are necessary. AJ Dumanhug also warned drivers and car owners not to use the linsensya.info website. Here’s the link of AJ Dumanhug’s write up about the incident https://atom.hackstreetboys.ph/lisensya-website-and-why-you-should-never-use-it/ There is one thing though that I noticed. AJ Dumanhug in his research used a legitimate driver’s license and motor vehicle number details. He got the information by just searching it on Google. This is the danger of oversharing that we have been warning users about. In this case, a media company (not Manila Bulletin) and a legit website shared photos without blurring the details making the owners of that information vulnerable to cyber attacks. By Art Samaniego Link to original post: https://mb.com.ph/2020/11/08/lto-exposes-thousands-of-information-due-to-misconfiguration/

It is important to note that in such a setting, products can be more tailor-fit for identified risk groups, which should be beneficial for both the consumer and the insurer. By ATTY. DARREN M. DE JESUS Early in this administration, the government sounded off its policy for financial inclusion. This is integral in government’s path towards poverty alleviation and fiscal stability. A key ingredient to this is a sound economic system that is protected in cases of emergency, catastrophes and other accidents: This is precisely where insurance comes in. However, certain sectors in society perceive insurance negatively considering the high price of the premiums and its protracted claims process. Neither does it help that the government insurer — PhilHealth — is in such a terrible state right now, bordering to its abolition or, more preferably, privatization. One thing that the government can do now to improve the image of insurance is to make it more affordable for all; hence, the push of the administration for microinsurance. Another item that government may look into is the removal of the tariffs in insurance. Through the implementation of a Tariff Structure for the Non-Life Insurance sector, consumers can be said to be protected by the Insurance Commission (IC) insofar as the motor and fire insurance lines, which are subjected to tariffs. On the other hand, with the detariffication of premium rates, insurers may charge customers as they see fit, allowing them to slash prices to barest minimum. A tariff is added tax levied by the government on specific goods or services. It is additional fiscal revenue for the government, at the same time it regulates certain practices to protect consumers. The Insurance Code mandates the periodical update of the classification structure. In a paper written by Bob Ingco, president of AMI Risk Consultants Inc., on detariffication, it was observed that most of the penalties collected for not following tariffs are due to insurance companies charging lower than what is required due to heavy price competition in the industry. In 2014, the IC recorded 3,368 breaches, resulting in a collection of P5.41 million, wherein the bulk of the penalties originated from the issuance of motor car and fire policies. The following year the commission collected P21 million from insurers for breaches of the tariff structure. I am quite certain more recent records will reveal a continual increase in tariff collections by the IC. Regardless, insurance companies continue to make a profit and seem to be willing to pay the tariffs after making a cost-benefit analysis. This begs the question if it is time for the detariffication of the insurance industry in the Philippines. ASEAN Countries such as Singapore, Indonesia, and Hong Kong have fully detariffied, meanwhile Cambodia and Thailand remain tariffied. Notably, Malaysia has implemented a phased liberalization of tariffs, to avoid the mishap that happened with the detariffication of the insurance industry in China between 2003 and 2006 where the market was not prepared with no Risk Based Capital (RBC) System in place, causing major solvency issues in companies to maintain operating cash flow. Notably, the Philippines IC has these systems in place, in addition to the tariffs. The nullification of the tariff structure shall give insurance companies freedom in product pricing, rendering the market to be even more competitive than before, reminiscent to a laissez-faire policy made famous by economist Adam Smith. Insurance companies may develop internal pricing policies that are centered on its risk appetite, thresholds have to be established in order to maintain capital adequacy and risk-based pricing shall be the key to success for each company. It is important to note that in such a setting, products can be more tailor-fit for identified risk groups, which should be beneficial for both the consumer and the insurer. In motor, insurers may load the added cost of providing a policy for a much older vehicle and lower risk drivers may be charged with lower premium rates. There now exists insurance technology or “insurtech” that allows drivers to customize their insurance on a per usage basis that should demand more flexibility in pricing of premiums, aka “bespoke insurance.” The question is whether the Philippines is ready for the abolition of tariffs, the same way if we are prepared for the abolition (or privatization) of PhilHealth. These are bold moves in our insurance industry that may see exponential growth if properly pulled off. Let us continue discussions for us to eventually know the answer. For comments, email him at darren_dejesus@cocogen.com or tweet him @darrendejesus. This article originally came out in www.tribune.net.ph https://tribune.net.ph/index.php/2020/10/23/free-market-in-insurance/

The National Reinsurance Corporation of the Philippines (NatRe) just won Reinsurer of the Year in this year's Asia Insurance Industry Awards. According to Asia Insurance Review, the organizer of the event, NatRe was lauded for its involvement in several initiatives aimed at promoting climate-risk insurance, pursuing reinsurance pooling opportunities and advancing risk-informed decision making. Amidst pandemic-induced confusion in the market - and turbulent economic conditions globally - NatRe stood tall together with 16 other heroes of the insurance and risk-management sector recognised for excellence at the highly-prestigious awards ceremony held online the night of November 2, 2020. Congratulations to PIRA Chairman Allan Santos for this huge victory for our country which came at the heels of the successful hosting of the Philippines of the 46th ASEAN Insurance Council (AIC) and 23rd ASEAN Insurance Regulators Meeting which he also headed. Photo © Cherry Sumague-Palacio

October 28, 2020 | Virtual HIGHLIGHTS OF THE AIC-AIRM MEETING

Regulators and leaders of the insurance industry all over the 10 countries of Southeast Asia gathered online for the 46th ASEAN Insurance Council (AIC) and 23rd ASEAN Insurance Regulators Meeting (AIRM), both hosted by the Philippines. Thanks to videoconferencing technology, however, insurance regulators and insurance industry leaders from 10 countries of Southeast Asia were still able to meet, discuss the challenges they are all facing, and propose solutions and directions moving forward. For several days in October, leaders from the life and general insurance sectors from Brunei, Cambodia, Laos, Indonesia, Malaysia, Myanmar, the host Philippines, Singapore, Thailand and Vietnam met through Zoom videoconferencing -- a first in history -- to update themselves of what each has been doing based on what they have agreed in their previous meeting in Nay Pyi Taw, Myanmar last year. ​ The leaders also spotlighted how Covid-19 is affecting their jurisdictions, and how the insurance sector is trying to survive and thrive amidst these trying times. In the latter part of the month, it was the regulators' turn to meet, and they followed it up with a Joint Plenary Meeting with industry leaders. ​ Insurance Commissioner Dennis Funa from the Philippines, who chaired this year's meetings, was elated at their success in serving their purpose of enabling a healthy exchange of ideas among the leaders. ​ Among the major points discussed in the meetings were the following: 1. Cross-border issues for motor vehicle insurance that affect the countries in the Southeast Asian mainland; 2. Insurance for natural catastrophes which mostly affect disaster-prone countries like the Philippines and Indonesia; 3. Agriculture insurance which is very successful in Thailand. 4. Digital innovations such as online examination for agents and other approaches to address the limitations from Covid-19 lockdowns; 5. The continuing development of insurance education, especially in the field of insurtech; and 6. Insurance products for the pandemic. PIRA Chairman Allan Santos, who also chaired the events' organizing committee, highlighted the "silver linings" in the Covid-19 crisis, among them the industry's accelerated adoption of digitalization and the fresh realization of people of the need for insurance.