Under Department Order 31-01 of the Department of Finance (DOF), all life and non-life insurance companies are required to have a minimum capital of P50 million by end June this year. Failure to meet the deadline would result in a suspension of operations and possible closure of the company.
IC Commissioner Eduardo T. Malinis said the commission would issue a cease-and-desist order to any insurer that fails to meet the extended deadline of July 30. Or they would withhold the issuance of the certificate of authority (CA) to operate for those companies still to be issued.
Malinis said the DOF is not inclined to extend anew the deadline despite appeals by 10 of the 16 insurers that have yet to comply. As of presstime, six of the insurers have submitted documentary evidence top show that they have complied with the capitalization requirement. "We have still to verify and review them (documents)," the IC commissioner said.
Other than cash, properties are acceptable forms of "capital" as long as an appraiser recognized by the Securities and Exchange Commission (SEC) does an independent valuation.
The IC earlier sought at extension from the DOF ruling issued in December 2001 ordering an increase in capital for insurance firms by July 1 this year. Malinis recommended that the extension be moved to end September where the insurers must have achieved at least P25-million in capital, and the full P50-million by end December.
Finance Undersecretary Cornelio C. Gison rejected the extension stating that it would not only violate the spirit of the order seeking strict compliance.
"Any extension granted to the non-complying insurance companies would go against the interest of the general public and might be perceived as protecting the interest of the few non-complying insurance companies. Moreover, an extension of the deadline would be unfair to those insurance companies that strictly complied with the requirements of the Department Order No. 31-01," Gison said.
As early as the first quarter of the year, all the 37 life insurance companies had complied with the P50-million minimum capital requirement while more than half of the 100 non-life insurance firms were in compliance.