AGRI Party-list Rep. Wilbert T. Lee believes that the Insurance Commission’s (IC) move to increase the minimum catastrophe insurance rates is an anti-competitive policy that will just incentivize cartels while passing on additional burdens to consumers as it will result in soaring prices of basic commodities.
The lawmaker from Sorsogon stated this during the Feb. 21 hearing of the House Committee on Banks and Financial Intermediaries on his House Resolution No. 632 which questions the abrupt increase in the said insurance premium.
Lee, through the Committee, invited IC Commissioner Atty. Dennis Funa whose term ended last December 2022 and is now only acting in a holdover capacity, members of the Philippine lnsurers and Reinsurers Association (PIRA) and the Philippine Competition Commission (PCC), among others, to be physically present in the next hearing.
“Paano ba nagko-compete ang mga non-life insurance companies?” Lee asked the Insurance Commission. “Pataasan po ba o pababaan ng insurance premiums? Kung pababaan, then why does the Insurance Commission want to regulate the minimum rates of insurance premiums?”
“Setting the minimum rates of insurance premium is a form of price control. Sa pagtakda ng minimum rate, pinapaboran nito ang pagkakaroon ng cartel sa industriya ng insurance,” he added.
During the hearing, Anti-Red Tape Authority (ARTA) Secretary Ernesto Perez confirmed that IC Circular Letter No. 2022-34 which imposed the catastrophe insurance rate adjustment failed to comply with the requirement stated in the law.
“I would like to remind our colleagues from the Insurance Commission of the requirement under Section 5 of the Ease of Doing Business and Efficient Government Service Delivery Act or Republic Act 11032… which requires that before any regulation will be proposed or implemented, it should be subjected to Regulatory Impact Assessment to ensure that the regulation does not cause undue regulatory burden, not only to the agency but to the transacting public as well,” Perez said.
“It seems clear to me that the regulation imposing an increased rate did not only undergo a process of consultation but also did not observe the requirement of Regulatory Impact Assessment. Therefore, that regulation is legally vulnerable and subject to attack in view of this failure to comply with this requirement,” the head of ARTA added.
Lee also reiterated the lack of consultation on IC’s planned rate adjustment which will reach up to as high as 400%. This was scheduled to be implemented last Jan. 1, but was deferred upon the solon’s relentless efforts, together with the overwhelming clamor from the general public, Micro, Small and Medium Enterprises (MSMEs), and business groups.
“Why call for stakeholder consultations regarding a Circular after the Circular has been issued? Why not call for these consultations before the Circular is issued? Kasi kung hindi natin ito nakita at walang nagreklamo, tumaas na ito noong Jan. 1,” Lee said.
According to Lee, the suspension of the implementation of the said IC Circular is a welcome respite to the inflation-weary Filipino, but still emphasized the need to scrap this untimely policy as the high cost of catastrophe insurance premiums will inevitably impact the unabated and 14-year record-high inflation in the country.
“Hindi ba dapat sa panahon ngayon na tayo ay nagrerecover mula sa pandemya at nahaharap sa matinding inflation, nagtutulungan tayo na bumangon. The fact na kumita ang insurance industry in another line of business sa non-life insurance coverage, it will balance the potential loss that may be incurred in another line of business. Malinaw sa mga datos na kumita pa rin sila. Hindi naman sa lahat ng pagkakataon, sa pakabig tayo,” Lee said.
“Napaka-wrong timing ng polisiyang ito. This is the reason why we in AGRI Party-list are calling for scrapping this increase in rates. Cancellation, not just suspension. Stoppage, not just postponement. Winner Tayo Lahat kung tuluyang mababasura ito,” he added.
Lee, through the Committee, invited IC Commissioner Atty. Dennis Funa whose term ended last December 2022 and is now only acting in a holdover capacity, members of the Philippine lnsurers and Reinsurers Association (PIRA) and the Philippine Competition Commission (PCC), among others, to be physically present in the next hearing.
