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Sunday, May 26, 2024

‘Rise in minimum catastrophe insurance rates will incentivize cartels’

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Agri party-list Rep. Wilbert Lee said the move of the Insurance Commission to increase the minimum catastrophe insurance rates is an anti-competitive policy that will just incentivize cartels while passing on additional burdens to consumers.

The lawmaker stated this during the Feb. 21 hearing of the House Committee on Banks and Financial Intermediaries on his House Resolution No. 632 which questions the abrupt increase in the said insurance premium.

“How do non-life insurance companies compete? By offering higher or lower insurance premiums? If it is by offering lower rates, then why does the Insurance Commission want to regulate the minimum rates of insurance premiums?”

“Setting the minimum rates of insurance premium is a form of price control. By doing so, you are favoring cartels in the insurance industry,” he added.

During the hearing, Anti-Red Tape Authority (ARTA) Secretary Ernesto Perez confirmed that IC Circular Letter No. 2022-34, which imposed the catastrophe insurance rate adjustment, failed to comply with the requirement stated in the law.

“I would like to remind our colleagues from the Insurance Commission of the requirement under Section 5 of the Ease of Doing Business and Efficient Government Service Delivery Act or Republic Act 11032… which requires that before any regulation will be proposed or implemented, it should be subjected to Regulatory Impact Assessment to ensure that the regulation does not cause undue regulatory burden, not only to the agency but to the transacting public as well,” Perez said.

“It seems clear to me that the regulation imposing an increased rate did not only undergo a process of consultation but also did not observe the requirement of Regulatory Impact Assessment. Therefore, that regulation is legally vulnerable subject to attack in view of this failure to comply with this requirement,” the ARTA chief added.

Lee also reiterated the lack of consultation on IC’s planned rate adjustment which will reach up to as high as 400%. This was scheduled to be implemented last Jan. 1, but has since been deferred.

“Why call for stakeholder consultations regarding a circular after the circular has been issued? Why not call for these consultations before the circular is issued? Had we not seen this, the increase would have taken effect on Jan. 1,” Lee said.

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