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IC delays implementation of new catastrophe cover pricing to 2023

BW FILE PHOTO

THE Insurance Commission (IC) has moved the implementation of a new rating structure and revised rates for nonlife insurers’ catastrophe risk policies to next year.

The IC said in a circular that the changes will now be implemented by Jan. 1, 2023 from the initial schedule of Nov. 1.

“Nonlife insurers were given time to advise their clients of the implementation of the revised schedule of minimum rates for earthquake and typhoon and flood risk covers,” the regulator said in IC Circular Letter 2022-48 dated Oct. 14.

The commission said it received a letter from the Philippine Insurers and Reinsurers Association, Inc. raising concerns about the original schedule.

“This commission was apprised of and consequently recognized the need to adjust the notification systems and procedures of nonlife insurers, as well as the annual budget limits of their respective clients,” it added.

In 2021, the IC formed a technical working group with stakeholders to determine risk-appropriate and sustainable catastrophe insurance rates and rating structure.

In July this year, the commission approved a revised rating structure for all catastrophe policies.

According to the revised pricing system, all insurance policies will use the flat catastrophe minimum rate of 0.1% for earthquake risks and 0.05% for typhoon and flood risks.

All nonlife insurance companies were instructed to adopt and implement the new rates and apply these to all insurance policies which provide cover for catastrophe risks. — Luisa Maria Jacinta C. Jocson

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