Presently, insurance companies have a minimum paid-up capital requiremment of P50 million.
Likewise, the risk-based capital (RBC) formula for all insurers will be adopted which should be completed within two to three years, the IC added.
But for new insurers, the commission will require a capital base of P1 billion.
"We want all the insurance companies to be financially sound to meet all claims of the insuring public. Looking at the region, the average capital base of our counterparts are over P500 million," IC commissioner Evangeline C. Escobillio said. "And we prefer that the other players in the industry consolidate themselves if they can not be at par."
Escobillo insisted that most, if not all, life insurance companies would not find it difficult to meet the IC requirements for minimum capital. "The challenge will be with the non-life insurance firms."
There are 34 life insurance companies and nearly 100 non-life insurers registered with the IC.
Non-life companies offer various forms of insurance protection for personal, fire, property, marine, and auto. Regulators argued that half that number would be more than sufficient to meet the needs of the insuring public as long as they are strongly capitalized and professionally run.
"They have to enhance their capital base or consolidate to strengthen the same," the IC commissioner added.
The Philippine Life Insurance Association (PLIA) said they are generally agreable to the initial P100-million capital base.
"The RBC formula will cover for all our products, investments, operations, and assets- or liabilities-default risks," PLIA president Peter Coyuito argued. "We are still making representations with the Department of Finance (DOF)."
The RBC formula is based on risk assumed by the insurer. The RBC formula is generally defined as the more the risks, the more products, the more capital required. It is differentiated from the outright capital build-up originally proposed by the IC. The last time the industry raised its capital was in 2002, from P10 million to P50 million.