Insurers in the Philippines have asked the Insurance Commission (IC) to ease certain regulatory requirements to alleviate the impact of the coronavirus pandemic on the industry, reported local publication BusinessWorld.
With major parts of the country under lockdown since mid-March, insurance sales have slumped and investments in the industry have declined due to coronavirus-driven volatility in financial markets.
Philippine Insurers and Reinsurers Association (PIRA) executive director Michael Rellosa said that its member companies have sought relief to help them cope with the economic fallout of COVID-19
However, he said that PIRA still has to consolidate the inputs of its 57 members before submitting a formal appeal to the IC.
He suggested that the IC should suspend or lower the minimum net worth requirement of PHP900m ($17.9m) for this year and 2021 after the value of insurers’ assets were eroded by market volatility.
Under the Insurance Code, existing insurers must have a net worth of at least PHP900m by 31 December 2019 and PHP1.3bn by 31 December 2022. Meanwhile, new players must have at least PHP1bn in paid-up capital.
Even though most insurers complied with the minimum net worth requirement last year, Mr Rellosa cautioned that the number of non-life insurance companies could be halved by the end of 2020 given weaker market conditions and the bleak economic outlook.
He noted that the sales of non-life insurers have declined due to depressed demand for their products and also the fact that most firms were not used to adopting work-from-home schemes.
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Despite lower revenues from business disruptions, insurers have also continued to pay for their usual expenses such as rental costs, utilities and salaries.
As the time of writing, the IC has not responded to queries on possible regulatory relief.
Meanwhile, Philippine Life Insurance Association president Benedicto Sison said that life insurers expect their assets to suffer due to local equity sell-offs although equities only make up a small portion of their total assets.
Sales of life insurance products also took a hit in the first month of the lockdown in the country as the mobility of financial advisors was restricted.
While Mr Sison noted an uptick in online sales of life insurance products, he highlighted that online sales of these products could not match the volume sold through licensed financial advisors as most clients still prefer face-to-face meetings before getting a policy.
According to him, sales had picked up after the IC allowed advisers to conduct digitally-enabled face-to-face selling of products.
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