MANILA — An official of the Philippine Insurers and Reinsurers Association (PIRA) urged member-companies to firm up their reserves as new regulations takes effect on Jan. 1, 2018.
In his speech during the PIRA forum at the Blue Leaf Filipinas events venue in Paranaque City Wednesday, PIRA Chairman Augusto P. Hidalgo said an actuarial study funded by the association showed that adequacy of member-companies’ reserves is nearing towards the 75th percentile of sufficiency.
“We are right above the 75 percent at this time,” he said.
Hidalgo, who is president of National Reinsurance Corp. of the Philippines, however, said the current level of reserves adequacy there remains at PHP8-billion gap in reserves.
“(This) represents more than 60 percent of industry premiums and claims,” he said.
Hidalgo said result of the study is “a bit of wake-up call”, noting that “claims in number has a big reserving component in it.”
He said the new reserves standards is additional expense of about 20 percent on insurers’ invested liability.
The Insurance Commission (IC) has enhanced, among others, the risk-based capital (RBC) requirements, now known as RBC 2, which has set a minimum RBC ratio of 100 percent for insurance companies.
PIRA data showed that as of end-2016, non-life insurance companies’ gross premiums totaled to PHP81.02 billion, 7.66 percent up from year-ago’s PHP75.26 billion.
Losses incurred reached PHP16.886 billion, up 27.8 from year-ago’s PHP13.2 billion.
Bulk of the losses was registered by motor car insurance at PHP10 billion; followed by fire insurance, PHP3.549 billion; Others, PHP2.92 billion; and marine insurance and aviation, PHP409.03 million.
Loss ratio in 2016 stood at 37.37 percent, up from year-ago’s 36.95 percent.