The Insurance Commission (IC) has ranked the quick enactment of a law, under which the country’s health maintenance organizations (HMOs) may be regulated, as one of the more urgent pieces of legislation requiring full support under the soon-to-be-convened 17th Congress.
This was revealed on Wednesday by IC chief Emmanuel F. Dooc, who told financial reporters the regulator is “working on the draft regulation concerning HMOs, which includes capitalization and solvency requirements.”
“The HMO industry needs a law, which will provide for a more stable and predictable legal framework,” Dooc, who inherited the task of regulating the multibillion-peso industry from the Department of Health (DOH), said.
Of prime importance, according to him, pertains to the need to properly capitalize HMO entities, considering the substantial risks they take as active players in the health business. Existing HMOs are capitalized at only P10 million and Dooc sees the need for substantially higher paid-up capital.
“Imagine, if you have so many members and you only have P10 million. You will suffer because you cannot [meet] the claims/payables. So I say new HMO companies should have capital of at least P100 million. It is a small amount if you compare them to insurers, but since they are not the same, I will be ok with the P100-million capital,” he said.
Dooc expressed his appreciation of efforts under the 16th Congress that passed the bill lifting the foreign ownership restrictions in specific laws governing adjustment companies, lending companies, financing companies and investment houses cited in the Foreign Investment Negative List. This pertains to Senate Bill (SB) 3023 sponsored by Senator Joseph Victor G. Ejercito enacted only in May this year.
“The IC expressed its full support to the said bill as part of our compliance with commitments to the Asean Economic Community, and noted that the business of adjustment companies is the only activity which has a foreign-equity limitation under the Insurance Code,” Dooc explained.
He also said the insurance industry needs more help from Congress in the form of more legislation, including the regulatory framework for the HMO industry. He anticipates greater support for this and similar proposals by the 17th Congress. Dooc and his pet proposals for reform were not as fortunate in the recently adjourned 16th Congress.
One other proposal mandating insurance cover for environmentally critical businesses in support of ecological protection did not pass muster in the 16th Congress. Senator Grace L. Poe introduced the proposal as SB 2761.
“We already submitted our comments to the said bill and we hope that a similar bill will be filed at the next Congress to give all stakeholders, both from the private and public sector, time to deliberate and improve on the said bill,” Dooc said.
The IC further noted the failure of the 16th Congress to enact House Bill 2325, which proposed the lowering of tax rates on nonlife-insurance companies. The lack of support for the proposal was traced to forecast revenue losses as high as P1 billion.
Dooc remained hopeful the 17th Congress can do something about it since the regulator plans to refile the
proposed bill.
“The IC fully supports the tax reduction on nonlife insurance premiums to make nonlife insurance products more affordable to the public, which will effectively increase the penetration rate. But we are hopeful that a similar bill will be filed during the 17th Congress,” Dooc added.