Benedict Sison
Life insurers are opposing proposed legislation that will split the regulation of variable unit linked (VUL) products, or policies that offer permanent life insurance with built-in savings component and investment of their cash value.
Philippine Life Insurance Association (PLIA) president Benedict C. Sison last week said among the recent regulatory trends and court decisions that “may not be to the best interest of our clients and the industry” included the bill on collective income schemes (CIS).
The pending proposal in Congress was aimed at putting under the Insurance Commission (IC) the regulation of VUL products’ protection component, while allowing the Securities and Exchange Commission (SEC) to oversee the investment component.
Sison, who is also Sun Life of Canada (Philippines) Inc. chief executive and country head, said the bill will “impose a reductant and costly governance structure, similar to other products to be
classified as CIS.”
The House of Representatives had been pushing for the CIS bill even as PLIA, the IC and the Department of Finance (DOF) had already
explained that VULs’ protection and investment components were indivisible as an insurance product.
Sison said PLIA was also wary about the state-run Credit Information Corp.’s (CIC) requirement to collect from insurance firms data on policyholders’ contract information, premium payments, as well as
policy loans.
While the CIC had explained that these pieces of information were needed in coming up with individuals’ credit scores as they indicated policyholders’ credit worthiness, the insurance industry had argued that such data
did not reflect credit behavior, on top of data privacy concerns.
In 2019, a Makati City regional trial court already stopped the CIC from getting customers’ data from insurance companies, as PLIA had filed a petition for declaratory relief.
Sison also said the life insurance sector was assessing the impact of the “possible change in judicial interpretation of concealment, and the application of the incontestability clause in the evaluation of claims.”
Also, Sison said insurance firms were bracing for the impact of the HIV Law on their claims processes, product designs and underwriting, referring to Republic Act (RA) No. 11166 or the Philippine HIV and AIDS Policy Act
signed by President Rodrigo Duterte in 2018.