The Insurance Commission (IC) has suspended the operations of five non-life insurance companies due to their failure to comply with capital requirements stipulated in the insurance law.
In a statement, Insurance commissioner Mr Dennis Funa said the five firms are First Integrated Bonding and Insurance, Investors Assurance, Metropolitan Insurance, Plaridel Surety and Insurance, and Premier Insurance and Surety.
Mr Funa stressed that the companies were not shuttered due to a weak financial status, but rather due to their inability to meet increases in the minimum net worth requirements for insurance companies, reported the Philippine Star.
“These companies are not operating on net losses. Based on the respective 2016 annual statements of the companies, all have positive net worth, but are short of the minimum amount required under the Insurance Code,” he said.
The insurers have been ordered to cease issuing new policies, or renewing policies after being placed under conservatorship.
Mr Funa said that placing the companies under conservatorship does not necessarily mean they would permanently close shop, as they could still explore various routes to return to business—including entering into a merger, or infusing fresh capital to meet the minimum capital requirement.
Under the insurance law, new players in the industry are required to have a minimum PHP1 billion (US$19.2 million) in paid-up capital when they establish their business in the country.
Existing insurers, for their part, must have a paid-up capital of at least PHP550 million by December 2016, PHP900 million by December 2019 and PHP1.3 billion by December 2022.
Aside from the five companies, the IC said six non-life insurers have also decided to voluntarily surrender their licenses due to their inability to comply with the capital requirement.
As a result, the IC said non-life insurance companies operating in the Philippines have been trimmed to 55 from 66.