Filipino-owned insurance firms want the government to drop the plan to increase the capitalization requirement for insurers to P1 billion by 2016, saying such a move would benefit only multinational companies and put many local firms out of business.
The plan is to raise the capital requirement from P250 million to P450 million next year, P625 million in 2014, P800 million in 2015 and to P1 billion in 2016.
The group said this would create an uneven playing field that would be advantageous to multinational companies.
According to industry estimates, at least 150 life and non-life insurance companies may be forced to close shop if the proposed capital requirement increase will be implemented.
For the life insurance industry alone, of the 33 industry member-companies, 25 would either find difficulty convincing shareholders to put up additional capital or be forced to fold up in the event of such an increase. The remaining eight life insurers that are likely to meet the proposed requirement are all multinational firms.
“The plan to have a one-size-fits-all capital requirement is something that is viewed by many members to benefit only the foreign players,” said an industry source.
The Philippine Life Insurance Association Inc. (PLIA) has asked the Insurance Commission to drop the plan.
In a letter to the Insurance Commission, PLIA urged the government agency to observe an existing circular requiring assessment of stability of insurance firms before imposing higher capital requirements.