MikeLigalig.com

source: PNA

The Philippines’ insurance sector is targeted to be at par with counterparts overseas with the latest rule requiring companies to meet a P1 billion minimum capital.

Finance Secretary Cesar Purisima said the insurance sector is among the industries expected to benefit from targeted integration of the Association of Southeast Asian Nation (ASEAN) by 2015.

“That’s part of the recognition that they have to do battle with other insurance companies from other countries,” he told reporters at the sidelines of the government’s mid-year economic briefing at Philippine International Convention Center (PICC) Monday.

Purisima explained that premium of life and non-life insurance products in the country remain “quite high” but once the regional integration kicks in insurance companies in the country will face greater competition, thus, the need to keep up with the competition.

“If they get together our consumers will benefit because the cost of insurance will go down,” he said.

To date, the minimum paid-up capital is P250 million but insurance companies are required to increase this every other year until it reaches P1 billion by 2020.

For reinsurers, they are required to have a P2 billion paid up capital by 2020 while entities involved in micro-insurance are required to meet a P500 million minimum capital.

Purisima said the domestic capital market needs to meet the demand of integration with other economies.

“What is important is since cross border trading is increasing then our disclosure requirement standard should follow suit,” he said.

The Finance chief said the ASEAN 2015 integration will push through as programmed but admits that “there may be areas that may have to be adjusted.”

“There will always be industries that might not be ready but what we’ve seen so far in the industries that have been integrated ahead of the 2015 schedule is they actually benefit,” he said citing as example the electronics sector.

Purisima said the country’s electronics sector was expected to die a few years back due to several reasons like lacklustre performance and size-related issue.

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