Insurers urge passage of amendments to Insurance Code

MANILA, Philippines - The country’s insurers are urging Congress to pass the proposed amendments to the 1974 Insurance Code.

George D. Mercado, president of the Philippine Life Insurance Association (PLIA), said they hope the amendments would be signed into law early this year.

PLIA is the trade organization of the country’s life insurance industry.

Mercado noted there had been many issues -- such as the sin taxes and the reproductive health bills – that had been prioritized. And soon, the local elections will again snatch the attention of legislators.

“We may be forced to re-file the proposed amendments in the next regular session of Congress, which is like starting from zero,” he said.

The PLIA president noted there might be dire consequences from further delays in putting in place new rules to improve the country’s insurance industry which, in turn, could mean better protection for the Filipino people.

The proposed amendments addresses a whole range of issues or regulations deemed antiquated and outdated.

He said the inability to pass the amendments would have a bearing on the health of the industry since the existing code stuns the growth of the industry.

“It will have a bearing on financial and accounting reporting investments and investment opportunities, products, minimum paid-up capital, margin of solvency, risk-based capital, regulations and the type of regulatory powers of the Insurance Commission,” the PLIA chief said.

The existing code restricts the type of investments to banks and government securities and an insignificant portion in equities and real estate. Because of the low interest rate environment, insurers are forced to re-price their products or see their profit margins shrink dangerously.

At the same time, they are not allowed to invest in bonds or fixed-income securities introduced by foreign governments or corporations.

Insurers are forced to follow two types of accounting standards, one set by the Code and another by international accounting standards (IAS).

“There are just a lot of regulatory quirks, mostly outdated,” Mercado added.