IC puts Forticare Health under conservatorship

MANILA, Philippines — The Insurance Commission (IC) has placed under conservatorship a health maintenance organization (HMO) for failure to deliver on its financial commitments.

In a letter, the IC placed Forticare Health Systems International Inc. under conservatorship due to the company’s inability and unwillingness to make cash infusion in compliance with the government’s orders.

According to the IC, the two-year old Forticare has missed out on its solvency requirements as mandated under Circular Letter 2016-41, later amended by Circular Letter 2017-50.

In September, Forticare volunteered to be placed under IC conservatorship due to the company’s inability to cover its net worth deficiency.

Also, Forticare informed the IC that it would no longer submit its audited financial statements for 2020 as a result of the financial backlog.

In response, the IC issued a cease and desist order against Forticare, prohibiting the firm and its agents from transacting further business.

Forticare, founded in 2019 and based in Malate, Manila, has a capital stock of P250 million and paid-up capital of P100 million, according to its web site. It provides a comprehensive health insurance for basic medical, outpatient and dental services, as well as special diagnostics and laboratory procedures, in patient care services and annual physical examination.

The HMO industry nearly doubled its profit to P1.56 billion in the first quarter, as benefits and claims sought by members dropped by double digits. Based on records from the IC, benefits and claims released by HMOs fell by more than 15 percent to P7.6 billion during the period.

Further, the industry tightened its belt by slashing expenses by at least nine percent. These two developments offset the almost three percent decline in HMO revenue to P12.79 billion, caused by the reduction in enrollment and membership fees rolled out by firms.