By Mary Grace Padin, November 19 2018; Philippine Star
Image Credit to Department of Finance
MANILA, Philippines — The Insurance Commission (IC) has tightened the reportorial requirements for all insurance and reinsurance companies in the Philippines on the reinsurance treaties they enter to improve transparency and ensure the prudential soundness of the industry.
Insurance commissioner Dennis Funa issued Circular Letter 2018-57, which requires insurance companies and professional reinsurers to report reinsurance information, pursuant to Section 226 of the Insurance Code.
“The Insurance Commission seeks to improve the availability of reinsurance information from insurance companies and professional reinsurers in order to assess compliance and to have a complete picture on the prudential soundness of the insurance companies and professional reinsurers,” the IC said.
“The Insurance Commission shall maintain a reinsurance database and require insurance companies and professional reinsurers to report reinsurance information,” it said.
Under the circular, all insurance companies and professional reinsurers authorized to transact insurance or reinsurance business are required to submit to the IC the particulars of their respective reinsurance treaty.
Insurance companies must submit their documents within three months after their reinsurance treaty’s inception or renewal date. For existing reinsurance treaties, the first report should be submitted on or before March 31, 2019.
The circular also provided the prescribed forms to be followed by insurance and reinsurance firms containing the description of the reinsuance or retrocession treaty for each product or line of business.
The IC allows insurance companies doing business in the Philippines to accept reinsurance on risks, and to retain risk within limits as it is authorized to insure.
Section 221 of the Insurance Code requires foreign and domestic non-life insurance companies to retain only any risk on one subject of insurance in an amount not exceeding 20 percent of its net worth.
In the first half of 2018, the Philippines’ insurance industry has seen sustained growth in terms of premium income.
Data from the IC showed the premium income of stakeholders in the insurance industry jumped more than 24 percent to P145.76 billion from P117.29 billion the same period last year.
Broken down, the premium income of the life insurance sector in the first six months of the year grew by 28 percent to P116.14 billion from P90.79 billion a year ago.
The non-life insurance sector also booked P24.44 billion in net premiums, 10 percent up from P22.2 billion in the same period in 2017.