Solon flags higher minimum rates for non-life insurance premiums

A lawmaker on Monday sought the deferment of the policy to increase the minimum and maximum rates of catastrophe insurance premiums amid the lingering pandemic.

AGRI party-list Representative Wilbert Lee was referring to the Insurance Commission’s (IC) Circular Letter No. 2022-34 which adjusted the applicable minimum and maximum catastrophe rates across the country.

The minimum rates, Lee said, were:

• from .15% to as high as .200% for commercial occupancy
• from .15% to as high as .200% for industrial occupancy
• from .15% to as high as .198% for warehouse occupancy and
• from .15% to as high as .155% for residential occupancy

The figures, Lee said, were drafted without sufficient consultations with end users and should be probed by Congress as provided under his House Resolution 632.

“The adjusted rates, which will take effect on January 1, 2023, are now diversified by determining factors such as risk zones and type of construction. As a result, there will be a sudden huge increase in insurance premiums ranging from 40% to as high as 400%,” Lee said.

“I have been to Cebu, Cavite, Laguna and Naga recently... lumalabas po sa konsultasyon natin, doble o hanggang quadruple ang pwedeng itaas sa mga binabayaran nating insurance tulad ng sa bahay, mga housing loan sa Pag-IBIG, sa GSIS, post-harvest facilities, agri machineries, fishing boats, dryers, mga storage, at pati ang Philippine Crop Insurance Corporation (non-crop insurance) apektado,” Lee said in a news conference.

(Based on our consultations, the increase could be double to quadruple the rates we are currently paying for insurance for our homes, housing loan in Pag-IBIG fund, GSIS loan, post-harvest facilities, agri machinery, fishing boats, dryers, storage, and even the Philippine Crop Insurance Corporation (non-crop insurance) is affected by this.)

Lee said such increases were not only ill-timed given that the country is yet to recover from the wrath of lockdowns and mobility restrictions due to COVID-19, but were unreasonable given that insurance companies are earning well, especially since the pandemic prompted a lot of people to invest in their future.

“Wala akong naririnig na nalulugi sila. Kung oo, ipakita nilang talagang nalulugi sila. Pero lalo nga po kumikita ang mga insurance companies ngayong kasi naging conscious ang mga tao [na maghanda sa anumang pangyayari],” Lee pointed out.

(I haven’t heard of them going bankrupt. If so, they should prove it. But insurance companies are doing well these days given that the pandemic made people conscious of what could happen in the future.)

“Is it because the rates are not increasing? But why tinker with the minimum rate and not the maximum rate [alone]? Taking into consideration that we are still just recovering from the effects of the COVID-19 pandemic, it is incumbent upon the government to respond to their critical needs as we slowly get back on our feet. We must not add to the burdens of the public, especially the marginalized sectors,” Lee said.

The Philippine Chamber of Commerce and Industry and the Employers Confederation of the Philippines supported Lee's view, saying that insurance premium increases should be shelved.

“An increase should have reasonable justification, not mere affirmation. The fact that we are taking time out in PCCI and sharing our thoughts on this, we are reaching out [to people concerned], this should be on the back burner for now,” PCCI President George Barcelon said.

“There should be consultation when it comes to [increasing] payments. Who were the ones present during the consultation process? ARTA should have them checked," ECOP President Sergio Ortiz-Luis added.

Lee, for this part, said seeking a Temporary Restraining Order (TRO) before a competent court was also an option.

“One of those who complained is looking at filing a TRO, and I hope that the PCCI and ECOP will be supportive of it if it ever comes to that,” Lee said.

GMA News Online had sought comment from the Insurance Commission on the matter but they have yet to respond as of posting time. — DVM, GMA Integrated News