The Insurance Commission (IC) has ordered new domestic and foreign health maintenance organizations (HMOs) to comply with a P100-million paid-up capitalization requirement to protect their members.
Insurance Commissioner Emmanuel F. Dooc on Friday signed Circular Letter 2016-41, which also allowed existing HMO companies to keep the lower capitalization requirement of P10 million earlier set by the Department of Health (DOH).
Existing HMO firms, however, must also adhere to a risk-based capital requirement based on the volume of business sold in the immediately preceding year, Dooc told reporters on Friday.
As for the new rule for incoming investors, Dooc explained the higher capitalization level would ensure that “every HMO company can service its obligation.”
Deputy Commissioner Dennis B. Funa noted the HMO industry had been plagued by fly-by-night firms that have victimized many Filipinos, especially in the provinces. This was the reason why HMO companies moved to have their financial health overseen and regulated by the IC, he said.
Supervision of the HMO sector was transferred to the IC from the DOH through Executive Order No. 192 issued by former President Benigno Aquino III last year.
Despite the new rule, Dooc noted industry-wide capitalization currently averaged between P75 million and P150 million, with the biggest HMO firm in the country having a paid-up capital of P351 million and a net worth of P947 million.
At least 28 HMOs currently operate in the country.