IC eyes higher paid-up capital for new HMOs

THE INSURANCE Commission (IC) is eyeing to impose a P100-million paid-up capitalization requirement for health maintenance organizations (HMOs) intending to set up shop in the country.

The commission, which became the regulator of HMOs beginning late 2015, would also form a committee on product guidelines that would approve HMO products, Insurance Commissioner Emmanuel F. Dooc told reporters recently.

A draft circular letter, which the IC had already circulated to industry players in order to solicit comments, also proposed a minimum paid-up capital worth at least P10 million for all existing domestic HMOs.

Dooc said the IC deemed P10 million “hardly sufficient,” but since existing HMOs had already secured their three-year licenses from the previous regulator, the Department of Health (DOH), they could not just be covered by the higher capitalization requirement.

Nonetheless, Dooc noted a number of players already have ample capitalization, citing one firm that has a standing paid up capital of P351 million.

At least 30 licensed HMOs are operating in the country as of end-2015, seven of which have paid-up capital worth at least P100 million.

The P100-million capitalization requirement would cover new HMOs, defined by the Insurance Commission as “all HMOs without existing clearance to operate from DOH as of December 31, 2015 or have ceased operations for at least a year.”

“ln case of foreign HMO branch office and foreign insurance company applying for HMO license, no license shall be issued unless the branch has deposited an amount of at least P100 million in its books and maintains a net asset of equivalent amount,” the draft circular read.

“Licensed life or nonlife insurance companies, mutual benefit associations (MBAs), insurance brokers and other entities with HMO-like business must set up a separate entity and apply for a separate HMO license,” it added.

Industry players have until April 28 to submit their comments on the draft circular.