MANILA, Philippines - Once more, the country’s non-life insurance industry is crying foul with regards a city of Makati ordinance imposing an accreditation process that restricts open competition.
Businesses located in the city of Makati undergo normal renewal of licenses, which requires automatic insurance for fire, property or automobile.
The problem is City Ordinance 2001-103 requires all insurers to first seek accreditation with the local government unit, and that only 15 insurers will be allowed a shot at the multi-million pesos businesses of non-life insurance related to renewal of licenses.
Just as it was complaining last year and again this year, the Philippine Insurance and Reinsurance Association (PIRA) and even the Insurance Commission (IC) said that limiting the accreditation to 15 firms out of the 91 non-life insurers was unfair.
Both the IC and the PIRA sent separate letters to the city of Makati to reconsider opening the accreditation to players.
The deadline for business permit renewal however is on Jan. 20, yet the list of accredited companies was only made public on Jan. 4, the first day of filing of business permit applications.
In his letter, IC Commissioner Eduardo T. Malinis said it is not within Makati’s power to determine the capacity of insurance companies.
“The Insurance Code explicitly says that it is the Insurance Commission which has the power to oversee insurance companies,” he said.
An unnamed Makati official rebutted that the local government has the power to limit the players under the city ordinance. Pira was also informed of the 2010 accreditation process in the last quarter of 2009.
Last year, the accreditation was based on the assets of companies and Makati officials arbitrarily chose the top 15 companies with the highest listed assets without requiring them to submit anything.
PIRA protested the accreditation since it unjustly damaged the reputation of insurance companies that were not included in the list.
PIRA chairman Michael Rellosa said Fortune General Insurance was not in the list. Hence, the business permit application of one of his clients was rejected last year as the insurance policy was issued by Fortune. As a result of the rejection, his client returned the policy.
“The rejection made our company look bad even though we have been a major player in the industry,” he said. Fortune, where Rellosa is chief executive, ranks 16th in terms of paid-up capital and 23rd in terms of networth.
The 11 accredited companies this year are: BPI Insurance Corp., CAP General Insurance Corp. (received license late last year), CCC Insurance Corp. (P75 million in terms of paid-up capital in 2008), UCPB General Insurance Corp.(P400 million), Empire Insurance Corp. (P100 million), Plaridel Surety & Insurance Corp. (P147 million), Insurance of the Philippine Islands Co. (P75 million), Liberty Insurance Corp. (P75 million), MAA General Assurance Phils. (P150 million), Monarch Insurance Co. (P105 million), and Philippine First Insurance Co. Inc. (P250 million).
Last year, the 15 accredited companies chosen due to their high paid-up capital are: Malayan Insurance (P845 million in paid-up capital in 2008), Philam Insurance (P581 million), Pioneer Insurance (P300 million), BPI/MS Insurance (P350 million), Tokio Marine Insurance, Prudential Guarantee (P250 million), Standard Insurance (P600 million), UCPB General Insurance (P400 million), Philippine Charter Insurance (P150 million), Mapfre Insurance (P500 million), PNB General Insurers (P312 million), Federal Phoenix Assurance (100 million), Philippines First Insurance (P250 million), Alliedbankers Insurance (P282 million), and Cibeles Insurance (P250 million).