A new player from Southeast Asia is set to join the Philippine insurance market this month, according to a report by BusinessWorld.
The company will be establishing life and nonlife insurance firms in the country, with Insurance Commissioner Dennis B. Funa confirming that its license to operate is currently being processed.
Funa also said that this new company has easily met the government’s new capital requirement.
The Philippine government currently requires insurance companies to have a minimum net worth of PHP900 million or about US$18 million. This requirement is set to increase to PHP1.3 billion or about US$25 million by the end of 2022, a move that many in the industry have highly criticised.
Earlier this year, the Philippine Insurers and Reinsurers Association (PIRA) penned a letter to senate representatives saying that the current minimum requirement in the country is significantly higher than those in neighbouring regions, with Vietnam capping its requirement at around US$13 million, Indonesia at a little over US$10 million, and Thailand at US$9 million.
Similarly, the Philippine Life Insurance Association said that the current minimum should be enough to “keep the industry well-capitalised, [enabling] companies to allocate their funds for other purposes.”
Regarding concerns over the net worth increase, Funa told BusinessWorld: “There are remedies for that: get new investors, get new stockholders. There is always a way to raise capital.”
The Department of Finance recently opposed a legislative proposal looking to keep capital requirements capped at the current minimum, with finance secretary Carlos Dominguez III saying that the planned increase will keep insurance firms cushioned from economic risks.
