The president of Pru Life UK in Manila, for example, said a higher capital base was necessary to better enable their non-life colleagues to compete more effectively both locally and on a regional basis.

Pru Life Manila President Antonio de Rosas said the capital base of most non-life insurers, given the requirements of the industry, was “hard to justify.”

“First of all, the minimum capital required for insurance companies in the Philippines is one of the lowest in the region. And given the requirements of the industry, the low capital base is very hard to justify,” de Rosas said.

He also said Finance Secretary Cesar Purisima, who directly oversees the Insurance Commission under Emmanuel L. Dooc at present, looks set to enforce the minimum capital requirement as scheduled.

“The authorities seemed very intent on pushing the minimum capital for non-life insurers as scheduled. There could be no extension,” de Rosas said.

The 85-member umbrella group PIRA, or the Philippine Insurers and Reinsurers Association, however, had been frantic over the impending imposition of higher capital and has written letters to the House of Representatives and the Senate in hopes of convincing the authorities for a deferment.

PIRA chairman Dr. Pedro P. Benedicto Jr. wrote separate letters to House Speaker Feliciano Belmonte Jr. and the Senate committee on banks and financial intermediaries under Sergio Osmena III to prevail upon Purisima and stop him from implementing the letter of the Department of Finance Order 27-06 mandating the buildup of minimum capital to P175 million.

In hopes of gathering legislative sympathy, Benedicto said the department order “will unduly pre-empt the on-going Congressional deliberations.”

He particularly warned that the prescribed minimum capital when implemented as scheduled “would lead to closures of a substantial number of non-life insurance companies which, in turn, can trigger widespread unemployment and deprivation of livelihood, among a substantial number of our insurance employees and agents.”

The claims were not new but were once again highlighted on Monday with a greater sense of urgency as Purisima, who has ordered the main collection agencies to generate 13 percent more revenues this year to P1.41 trillion, seemed intent on pursuing the capital buildup program for insurance companies no matter earlier representations for deferment or similar relief.

“The same would further expose the insuring public from unnecessary risks, as reinsurance facilities and [similar risk] covers automatically dry up as reinsurance support is withdrawn upon the closure of these local insurance companies – a big headache that our regulatory authorities will have to contend with,” Benedicto said.

He pointed out the insurance industry, as proof of their good corporate citizenship, has not been involved in claims-settlement failures or insurance- benefits disputes in more recent history.

Even the small non-life insurance companies have behaved in a manner deserving recognition, boosting the popularity of risk cover for property in the process, Benedicto added.

“Similarly, there were no recent closures solely for reasons of insolvency involving the smaller member companies of our association,” he said.

Benedicto added that most small-capitalized companies are convinced that the forthcoming AFAS implementation does not present any threat to the local market and neither to their own respective businesses.

“These companies are already entrenched in their own specific market turfs and niches in the local market. Anyone can attest to the fact that the Philippines has always been openly encouraging entry of foreign insurers into the Philippine market but none ever came since 2000,” he said.

Capital should be a function of risk, Benedicto insisted.

Global best practices in regulation have already shifted to robust enterprise risk management and risk based capital quantification, he added.

Along this line, PIRA supports the industry’s strengthening through robust risk management based regulation rather than a regulatory imposed capital.

PIRA is the umbrella organization of 85 non-life insurance companies in the Philippines.