Consumers and micro, small, and medium enterprises (MSMEs) will not have to bear the additional burden of increased catastrophe insurance costs.
This was after Rep. Wilbert T. Lee of AGRI party-list group blasted the Insurance Commission (IC) for issuing IC Circular Letter No. 2022-34 dated July 14, 2022, which would have imposed as much as 400 percent increase in minimum catastrophe insurance rates.
Lee was able to secure a commitment from the IC to revoke the implementation of the said circular after he moved to defer the budget of the Department of Finance (DOF) and its attached agencies during plenary budget deliberations recently.
The Bicolano lawmaker only agreed to withdraw the motion when IC Commissioner Reynaldo Regalado finally committed to him and other House Members that the IC will revoke the increase in insurance premium rates, as well as nullify a Memorandum of Understanding (MOU) between the IC and insurance companies involving the establishment of the Philippine Catastrophe lnsurance Facility (PCIF) if the MOU is found to be illegal. IC Commissioner Regalado said that they will review the legality of the said MOU within 15 days.
Lee questioned the IC Circular increasing the minimum catastrophe premium rates, which he said was unnecessary as the House was able to determine that insurance companies were profitable.
“Why? Are insurance companies in the red?” Lee asked in Filipino.
“During our House Inquiry, we were able to expose that all insurance companies, except for two, were recording high-profit.”
“This circular clearly destroys competition. Instead, the IC should look into setting the maximum rate that insurance companies can charge and let the market forces dictate the prices or rates,” Lee stressed.
Lee earlier filed House Resolution 632 in December 2022 to probe into the untimely and unjust increase in the said insurance premiums. He then led the House Inquiry last February, where he exposed the detrimental effects of the policy, which was decided without prior consultation with the private sector and end-users.
During the deliberations, Lee inquired about the MOU signed on January 28, 2020 by representatives of the IC, the Philippine lnsurers and Reinsurers Association, Inc. (PIRA), and the National Reinsurance Corporation of the Philippines (NatRe).
The solon questioned the obvious conflict of interest of the IC entering into the said MOU, and stressed that “it does not make sense that the Insurance Commission will find it prudent to enter into the subject MOU knowing fully well its obligations as both a regulatory body and a quasi-judicial body.”
“This is a clear case of conflict of interest. How can a regulatory agency enter into a MOU with the industry that they are supposed to regulate?”
According to Lee, the said MOU establishing the PCIF “is just a dubious scheme to impose a premium rate no longer dictated by the market but by agreement among the insurance companies brokered by the IC.”