By LEE C. CHIPONGIAN
Two house bills were filed in the Lower House seeking to put the Insurance Commission (IC) under the influence and power of the Bangko Sentral ng Pilipinas (BSP).
House Bill No. 6162, “An Act Reorganizing and Converting the Insurance Commission into a Collegial Body” and amending three sections of the Insurance Code (Republic Act No. 10607) was filed by Party List Rep. Sharon S. Garin (AAMBIS-OWA) last February 3. Another one, House Bill No. 6292, also amending the Insurance Code, was filed last February 13 by Rep. Rufus B. Rodriguez of Cagayan de Oro City Second District.
The proposed legislations in effect would make the BSP a “super regulator” similar to the Monetary Authority of Singapore and Bank Negara Malaysia.
BSP officials asked to comment did not respond, but according to sources from the central bank, the two bills “do not make sense” because for one, it would have to amend the BSP Charter again before it could take control of the IC.
The BSP Charter amendment was just approved on February 14, 2019 after more than two decades of waiting. RA No. 11211 amended RA No. 7653 known as the “New Central Bank Act” of 2003 which among other things, empowered the BSP further in overseeing the Philippine payment and settlement systems, strengthened its ability to obtain data from almost anyone, persons or entities, and it expanded BSP’s supervisory authority. It also increased the BSP capitalization from ₱50 billion to ₱200 billion.
At the moment the BSP jurisdiction is limited to banks and non-banks with quasi banking functions. However the amended charter gives them additional supervision powers to other financial institutions such as money service businesses, credit granting businesses and payment system operators.
Both HB Nos. 6162 and 6292 propose to place the IC “under the direct control and supervision of the BSP” effectively wrestling it away from the Department of Finance (DOF). The IC is an attacted agency of the DOF and reports directly to the DOF Secretary.
And, while the IC as a BSP unit may issue rulings, circulars, orders, and instructions, all decisions “except otherwise specified” that were made by the IC “shall be appealable to the Governor of the BSP.” The BSP governor like IC officials, are all appointed by Malacanang.
According to Rep. Garin, the insurance business is “akin” or similar to how banking and financial firms conduct their business anyway which is to say they all will have an impact on economic growth. “Therefore its regulation is of paramount importance,” she said.
Garin said it is crucial that the IC should be similar to BSP and the Securities and Exchange Commission – both governed by collegial bodies. For the BSP, this is the Monetary Board. Under the Insurance Code, the IC is headed by just one person, the IC Commissioner.
She said that the creation of a collegial body of four commissioners with a term of six years will “bring stability (in IC)” to regulate the insurance sector which is necessary to financial stability.
Rep. Rodriguez, for his part, said: “The insurance industry is one which greatly affects national interests and our economy. Under RA No. 10607 (the Insurance Code), the Insurance Commissioner is given a wide array of powers and duties which basically means that he is the one regulating the entire insurance industry.”
The IC currently supervises and monitors 131 life and non-life insurance companies including mutual benefit associations. The industry asset size reached ₱1.74 trillion at the end of 2019, up 12.30 percent year-on-year.