The Philippines’ Insurance Commission has increased the insurance capital requirement for all insurance companies, effective December 31, 2016. By then, all insurers must have a net worth of US$11.66m, up from US$5.3m previously.
Five months before the deadline, Insurance Commissioner Emmanuel Dooc reminded insurers about the incoming regulation change. He also followed up on a 2015 directive for insurance companies to submit their plans on how to increase capital.
Based on the plans the regulator received, Dooc said that mergers and acquisitions will likely be more common in the country’s insurance scene, as these could help reach the stipulated net worth, which is more than double the previous value.
“While there are some insurance companies who are capable of infusing fresh funds to meet the increase, there are some companies who plan to merge or consolidate with other existing insurance companies while there are some who are looking for new investors and partners,” he added.
With a higher capital requirement, insurers will be in a better position to expand and provide their clients with greater security. It also allows domestic insurers to be more competitive with other firms In the ASEAN region.
The Amended Insurance Code mandates capital requirement hikes every three years until 2022. By 2019, the minimum will be around US$19m, and by 2022 it will be US$27.5m.
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