The Philippines’ Insurance Commission (IC) has ordered P&C insurers under its jurisdiction to implement a new pricing structure for catastrophe risk policies, effective April 2022.
In a circular by IC chief Dennis Funa, all non-life insurers must adopt new catastrophe insurance premium rates and help establish the Philippine Catastrophe Insurance Facility (PCIF), BusinessWorld reported.
The regulator will also hold a consultation with the sector to draw up the new premium rates. Companies are invited to nominate representatives for the PCIF’s technical working group. This group will help devise the structure, governance and other concerns and details of the facility.
With the facility setting rates for catastrophe cover, the industry will be able to set a “reasonable” maximum limit per risk and per policy, as agreed upon by the P&C insurance sector, which is represented by the Philippine Insurers and Reinsurers Association (PIRA).
The changes will take effect roughly one year from now, in April 2022, taking into account insurers’ active reinsurance contracts.
The PCIF will act as a risk pool, allowing P&C insurers to more efficiently manage catastrophe exposure and boost capacity. Prior to the establishment of PCIF, local insurers signed reinsurance agreements solely with foreign reinsurers.
By providing a domestic alternative, the IC aims to aid the growth of the Philippine catastrophe insurance market, widening its premium base and capacity for risk.