Last year, the commission raised the networth capital base whcih includes paid up capital, to P100 million from a mere P50 million. Based on its five-year capital build-up plan, all insurance companies must have a networth capital base of P500 million by 2010.
After extensive discussions with both the life and non-life insurance sectoral representatives, the commission agreed to suspend the 2007 capital increase of another P100 million if a minimum of 80 percent of each sector’s players can prove a 150-percent risk cover based on the RBC formula.
The audited financial reports were to be submitted last month, and the IC will need two to three months to review and determine the industry’s adoption of the RBC.
IC Commissioner Evangeline Escobillo said that is there is an 80-percent compliance then the commission may suspend the additional P100-million capital raising requirement.
"But the insurers that failed to prove a 150-percent risk cover will have to raise their capital this year based on the original plan," Escobillo said, during the soft launch of its information technology (IT) and electronic data base center.
Failure by the industry players to reach the 80-percent minimum rule will mean that all insurers must raise their networth capital to a total of P200 million by end 2007.
Both the Philippine Life Insurance Association (PLIA) and the commission is optimistic that majority if not all the life insurers would meet the risk-cover requirement. The PLIA is the trade organization representing the country’s 34 licensed life insurance companies.
However, officers of the Philippine Insurance and Reinsurance Association (PIRA) and the commission expressed apprehension that a quarter of the 94 non-life companies could meet the 2007 requirements.
"In fact, there are already insurers searching the market for joint venture arrangements to raise funds to meet the RBC and capital requirements," industry players admitted, adding that a few will be seeking mergers or looking for acquisitions.
Many likewise admitted that there were too many players in the non-life sector fighting for a slice of a relatively small market.
Finance Secretary Gary Teves congratulated the IC for opening its electronic date center. "Decision-making by regulators is different without data and information. Faster information or data updating generally means better decisions," Teves said.
The IT data center includes the main frame, IT office and conference room, came at a cost of P30 million sourced from the half of the collections of five-percent premium tax slapped on life policies. The IT and data center was established by the Data Center Inc. of the Development Bank of the Philippines (DBP).
Escobillo said that all the sections of the commission will be linked electronically with the main frame within the year. By the end of the year, the IT data center will be linking with the industry.
That will allow for closer monitoring and regulation of the industry.
The commission will then require quarterly electronic reporting of investments, financial reports, and product development. By next year, the IC will require monthly electronic reports from the industry.  Ted Torres