Insurers blast proposed hike in fees, charges

MANILA, Philippines - The country’s insurance industry is strongly opposing the proposed consolidation of fees and charges of the Insurance Commission (IC), which increases the present levels by as much as 200 percent, as well as introducing new ones.

Both the Philippine Life Insurance Association (PLIA) representing the life insurance industry, and the Philippine Insurers and Re-insurers Association (PIRA) representing the non-life sector submitted position papers opposing in effect the proposed hike in fees and charges.

PIRA called it “unconstitutional, exorbitant and unreasonable” and almost “acquiring the character of taxes.”

The non-life insurance industry is one of the most taxed financial sector, wherein roughly 25 percent of the premiums paid by the public are in fact national and local taxes.

PLIA argued that the proposed increases would negate the gains won from the earlier reduction of the five-percent premium tax to just two percent.

However, insurers sheepishly agreed that an increase in general was reasonable as the last time any increases were imposed were over a decade. “We acknowledge that the IC must be self-sustaining, but it should be reasonable and with basis.”

The position papers were handed over to the IC in a consultative meeting last March 24.

Also affected were the mutual benefit associations (MBA), the sales agents, the re-insurance industry, the pre-need industry, brokers, among others.

IC Commissioner Emmanuel Dooc is open to further consultations to arrive at the best win-win situation, but wants to reach a resolution this April.

Practically all fees for registration, licensing, penalties to product approvals have proposed increases from 10 percent up to 200 percent.

Proposals from the insurers include: imposition of the new rates starting next year to a staggered imposition period over a three- to five-year period.

They argued that financial budgeting for 2014 are already in place and that imposing new rates would derail their programs.

“We acknowledge that it has been years since IC changed their fees, but it must be done with restraint and discretion, gradual or in tranches. There is that danger that insurers will pass on the burden to its clients, which will defeat the purpose of the proposal to improve IC services and capabilities,” insurers argued.

Others said that there must be a balance between recovering the cost of services rendered and socio-economic impact of their imposition. In other words, just and reasonable rates based on proven costs from services rendered, and that it must be at par with other government agencies.

Another suggested that the IC must put in place “a firm and quick turn-around-time (TAT) in return for increased fees, with product approvals for example within a 30-day period.”

Incidentally, the Securities and Exchange Commission (SEC) and the IC are in discussion on moving their respective head offices to the Bonifacio Global City (BGC). They are likewise extending the talks to other agencies such as the Bureau of Internal Revenue (BIR) and the Government Services and Insurance System (GSIS).

The rationale behind the proposal is that more and more businesses are locating or relocating in BGC. At the same time, there are no available options in the central business district of Makati.

 

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