MANILA, Philippines — Life insurers and the insurance regulator on Sunday said they support the moves in Congress for a payment moratorium of only up to 60 days under the pending Bayanihan 2 bill.
Philippine Life Insurance Association (PLIA) president Benedict Sison told the Inquirer that their group “finds the bicameral committee’s 60-day grace period compromise provision in the Bayanihan to Recover as One Act acceptable.”
“It is equivalent to the minimum grace period granted by the industry during the enhanced community quarantine (ECQ) declaration in March, representing the 30-day policy contractual grace period and the extension that the Insurance Commission had encouraged companies to implement,” said Sison, who’s also Sun Life Philippines chief executive and country head.
“PLIA recognizes the difficulties policyholders may have in settling their due premiums in these trying times. The 60-day period offers a balanced consideration of the insured public’s interest as well as that of the insurance companies, who themselves need to ensure their continued ability to service all their commitments to their policyholders,” Sison added.
Sison nonetheless said that “exempting insurance companies from this 60-day mandatory grace period would also turn out beneficial to our policyholders as steadier premium inflow would become available for investing and generating returns that would assure their readiness to respond to claims especially those related to COVID-19.”
“At this time when people’s health and wealth are a bit more vulnerable, the role of the insurance industry becomes even more important as it helps people mitigate the risks they face. Thus, it is also important that we work towards a balanced solution that would ease the plight of our fellow Filipinos while also ensuring the continued stability of the industries that are there to help them,” Sison said.
For its part, the Insurance Commission (IC) in a statement on Sunday said that its Aug. 12 letter to the bicameral committee warned against the House’s earlier proposal for a 365-day moratorium on life and pre-need premiums and backed the Senate’s previous pitch for a shorter 30-day grace period.
“We understand that the proposed policy in House Bill (HB) No. 6953, while favoring life insurance and pre-need customers, may spell financial danger to life insurance and pre-need companies, which are among the pillars of the Philippine economy that also need protection,” Insurance Commissioner Dennis Funa said.
“As the regulatory body for life insurance and pre-need companies, the IC needed to tell Congress that the proposed one-year or 365-day grace period in HB 6953, if passed into law, will add to the life insurance and pre-need industries’ challenge of generating as much premiums from its existing business. Right now, said industries need to generate such premiums from existing business in order to offset the decline in new business premiums resulting from the slowed market demand,” Funa added.
“Life insurance and pre-need companies are still reeling from the effects of the reduced economic activity, which has already resulted in the reduction of premiums collected and earned. With due respect to Congress, we fear that a one-year moratorium will exacerbate the adverse economic effects of the pandemic to said industries’ financial and capital positions, such that said industries may be permanently unable to recoup the consequent losses during this period, even if we were to consider future premiums,” the IC chief said.
As such, Funa said the IC had asked Congress to include a 60-day grace period for insurance policies as well as pre-need contracts.
“As a form of compromise between the House of Representatives and Senate versions of Bayanihan 2, we wrote Congress to suggest that life insurance and pre-need customers instead be given a 30-day extension in addition to the usual and existing 30- or 31-day contractual grace periods under insurance policies and pre-need contracts. Taken together, this makes for a total extension of 60 days in favor of the consumers,” Funa said.
“We firmly believe that this proposed alternative achieves a balancing of interests. The suggestion affords both life insurance and pre-need customers, as well as life insurance and pre-need companies, much-needed relief from the adverse economic and financial effects of the COVID-19 pandemic,” Funa added.