October 21, 2008

35 insurance firms face closure

By VG Cabuag / Reporter
BusinessMirror, Oct. 21, 2008

By the end of this year all insurance companies must have a capitalization of at least P100 million, but about 35 firms of the roughly 70 insurance companies, mostly small players, have not complied with the Insurance Commission (IC) and face being shut down.

Who these companies are have not been disclosed by IC Deputy Commissioner Vida Chiong, who said on Monday, “We will issue a cease-and-desist order to them if they have not complied.” (Click here for the rest.)

Actually, you can tell which insurance firms these are. You can download the lists of insurance companies (life and non-life) and their paid-in capitalization via the Insurance Commission's web site. But in the interest of the public, I'm posting the lists here.

Life insurance firms

Non-life firms

As per the Corporation Code of the Philippines, corporations have to have at least 25% of their authorized capital paid up. So get your calculators cracking to find out w/c of these insurers you should avoid.

(Eduardo T. Malinis runs the show at the Insurance Commission. Photo from the IC web site.)

It is interesting to note that the Insurance Commission has been sitting on this problem for two years. Only when the mighty AIG fell that the agency's heads thought of actually doing anything about the poor capitalization of the country's insurance firms. Well, as they say, better late than later.

So if you're afraid of the sub-prime credit mess in the U.S. will have a great impact on Philippine banks, well, guess again. What we should be worried about are our insurance companies and their very low capitalization. A high capital is vital to protect the insured from a collapsing insurance company. It is the government's reponsibility to make sure that if anything untoward happens to an insurance firm, the latter will have enough capital/money to pay the benefits to its clients or refund them their premiums.

As usual, this government is only great on soundbytes but very poor in actual implementation.

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