Nonlife insurers seek tax remedies amid virus burden

Nonlife insurers are pushing for additional tax reforms and amendments to the seven-year-old Insurance Code to help the sector rebound from the challenging year wrought by the COVID-19 pandemic.

Philippine Insurers and Reinsurers Association (Pira) chair Allan Santos said the nonlife insurance sector wanted to remove the 12-percent value-added tax slapped on reinsurance.

Also, Santos said Pira had proposed to reduce the documentary stamp tax slapped on insurance by 1 percent each year for the next five years as part of the Passive Income and Financial Intermediary Taxation Act tax reform package pending in Congress.

Alongside these tax measures, Santos added Pira was also crafting proposals to further revise the Amended Insurance Code, or Republic Act No. 10607, in order to better regulate the nonlife sector.

Last year, the Insurance Commission (IC) started soliciting comments from industry groups Pira and Philippine Life Insurance Association in a bid to introduce fresh amendments to RA 10607 and fill the gap in regulating insurers’ fast-changing business models.

Based on preliminary documents earlier obtained by the Inquirer, the proposed RA 10607 amendments included new rules on agri-insurance as well as Islamic, catastrophe and parametric insurance.

The IC also wanted to cover risks from contingent events through parametric insurance, extreme or exceptional events through catastrophe insurance and the protection of farmers against damages or losses to crops and livestock.

Pira and the IC are currently working together to develop the so-called Philippine catastrophe insurance facility, which has an aim “to promote viable catastrophe insurance, reduce the protection gap and strengthen disaster resilience,” according to Santos.

Nonlife insurers and the insurance industry regulator had wanted to make insurance of private assets from earthquakes, typhoons and flooding mandatory.