IC strengthens product approval quality, management measures

MANILA, Philippines — The Insurance Commission (IC) has issued new rules to strengthen the approval process and quality management measures for products of insurance companies.

Insurance Commissioner Dennis Funa issued  IC circular 2019-71 which laid out the guidelines for the product oversight and governance of insurance companies, which are consistent with international standards.

Under the circular, Funa ordered insurance companies to set up a management-level committee which will be tasked to oversee the insurer’s products.

“It shall provide oversight of the company’s internal processes, organizational arrangements, functions and strategies aimed at designing, distributing and reviewing the insurance products throughout their life cycle,” Funa said.

The committee is also tasked with defining the firm’s business strategy and risk appetite to monitor compliance.

“It shall bear responsibility for all phases of product development, as well as constant monitoring, review of the products and its distribution, putting emphasis on the performance of the products in terms of financial viability and fair treatment of customers,” Funa said.

In addition, IC directed  insurers to submit on April 30 of each year an annual inventory of all insurance products the agency had approved as of Dec. 31 of the prior year, including those that the company discontinued selling.

Corporations that develop insurance products should maintain and review an approval process for its products before it is marketed and distributed to consumers.

The product approval process should ensure that the design of the insurance products takes into account the objectives and interests of consumers, does not adversely affect customers, prevents or mitigates customer detriment, and support proper management of conflicts of interest.

Insurers designating a third party to design their products shall remain fully responsible for the compliance of their product approval process and other requirements, IC said.

Funa also directed insurance firms to test their products, including scenario analyses, before bringing them to the market.

“That product testing shall assess whether the insurance product over its lifetime meets the identified needs, objectives and characteristics of the target market,” he said.

Insurers were also reminded to carefully select the distribution channels that are appropriate for their target market, and to ensure that appropriate information is delivered to customers.