A lawmaker filed on Monday a resolution calling for an investigation on the impending abrupt and unreasonable increase of catastrophe—typhoon, flood, earthquake, among others—insurance premium rates.
In House Resolution 632, AGRI Party-list Rep. Wilbert T. Lee said the increase will greatly affect the prices of basic commodities and will be an additional burden to the public.
Lee said he filed the resolution to determine the scope and impact of the Insurance Commission’s (IC) Circular Letter 2022-34 that adjusted the applicable minimum and maximum catastrophe rates across the country.
The adjusted rates, which will take effect on January 1, 2023, are now diversified by determining factors such as risk zones and type of construction. As a result, there will be a sudden huge increase in insurance premiums ranging from 40 percent to as high as 400 percent.
“The increase ranging from 40 percent to as high as 400 percent in insurance bills to companies, especially to MSMEs [micro-sized, small-scale, medium-sized enterprises] is too high to bear,” Lee said. “It is surely an unreasonable increase and certainly, the paying public will bear the burden of these abrupt increases in insurance rates.”
The lawmaker added that “taking into consideration that we are still just recovering from the effects of the Covid-19 pandemic, it is incumbent upon the government to respond to their critical needs as we slowly get back on our feet.”
“We must not add to the burdens of the public, especially the marginalized sectors,” Lee said.
THE resolution noted that the high cost of catastrophe insurance premiums will certainly impact the unabated and record-high inflation. The bill also said the cost can contribute to the further increase in prices of basic commodities, taking into account the wide scope of catastrophe insurance that covers buildings, warehouses, equipment and residential properties.
The lawmaker said that despite conducting consultations with the Philippine Insurers and Reinsurers Association Inc. (Pira), an organization of all licensed non-life insurance companies in the country, it is crucial to consult the end-user consumers who will be immensely affected by the huge increase in insurance rates.
“The extent of the consultations conducted by the Insurance Commission is very limited. Several organized business groups and private firms expressed their strong opposition to the said policy in the absence of proper consultation considering the very high increase in insurance cost that can be detrimental to the general public,” Lee said.
“The extremely high and sudden increase in premium rates is unacceptable considering the present challenges and recovery of firms doing business in the Philippines that are availing catastrophe insurance,” he said.
According to Lee, the IC must seriously revisit and hold the implementation of the said policy to allow them to carefully study its critical and detrimental consequences and outcome to various firms, MSMEs and public consumers.