The joint bidding committee headed by Finance Secretary Jose Isidro Camacho has started talks with the National Reinsurance Co. (National Re) and Malayan Reinsurance (Malayan Re), and that it expects to close a reinsurance arrangement that could save the government up to 15 percent of the cover cost.
Amalio A. Mallari, GSIS senior vice president for the general insurance group, said they have been authorized to deal directly with a reinsurer instead of going through a broker, and that the move would result in savings that would normally have gone to a broker in terms of fee to commission.
"The lower cost with the appropriate cover is what the joint bidding committee favored in the new arrangement," Mallari, who is also a member of the joint bidding committee, said.
Big ticket non-life insurance coverage like that of Napocor requires not only an insurer but also a reinsurer to enable ample coverage for claims. In the Philippines, non-life insurance companies tap both domestic and international reinsurers for big ticket or high-valued policies.
The estimated premium of Napocor’s insurance policy is $18 million, which the joint bidding committee hopes to reduce by dealing directly with the reinsurers and not through a broker.
Mallari said, the GSIS will issue today a cover note to ensure the the Napocor assets are aptly covered. A cover note is a temporary insurance policy where the value or risk coverage is equivalent to the policy that lapsed.
The government pension funds, which under the law is to be the sole insurer of government properties, has reserves for insurance and reinsurance coverage of up to P12 billion.