MANILA, Philippines - A total of 10 insurance companies are still under capitalized, three of which are life insurance firms and the remaining seven are non-life insurance companies.
Based on regulations of the Insurance Commission (IC), failure to reach the minimum paid-up capital level of P100-million will mean suspension of operations for one year, or until the insurer has achieved the minimum level.
The commission refused to give the names of the insurers to avoid misinterpretation by the public. “They have in varying degrees pledged to raise the required amounts to reach the minimum capital level, or they are still contesting some technicalities,” Vida T. Chiong, IC Deputy Commissioner said.
Of the three life insurers, one firm is working on a stock dividend or stock offer while the other has a conservator that is reviewing its assets. The third insurer is still contesting the issue of local and foreign ownership.
Of the seven non-life, one has voluntarily sought closure while another is looking for a buyer. “The rest have pledged to raise their deficient amounts within the month,” Chiong added.
Inability to attain the minimum capital requirement means suspension of operations or non-issuance of authority to operate. Suspended insurers will only be allowed to continue servicing existing policies but disallowed to create new business.
However, the situation may go haywire if the Department of Finance (DOF) fails to sign a draft circular implementing the minimum paid-up capital requirement.
The existing capital regulations require all insurance firms to increase its networth capital to P100 million starting 2006, and through a graduated process reach P500 million by 2012.
The proposed draft circular scaled these down to a minimum paid-up capital of P100 million this year. From thereon until 2015, the minimum paid-up capital will be increased annually by P25 million to reach P250 million.