The Insurance Commission’s (IC) move to increase the minimum catastrophe insurance rates is an anti-competitive policy that will just incentivize cartels and pass on additional burdens to consumers in the form of price hikes.
Thus, underscored AGRI Party-list Rep. Wilbert on Sunday, Feb. 26, following a public hearing of the Committee on Banks and Finacial Intermediaries on his House Resolution (HR) No. 632, which questioned the abrupt increase in the said insurance premium.
“Setting the minimum rates of insurance premium is a form of price control. Sa pagtakda ng minimum rate, pinapaboran nito ang pagkakaroon ng cartel sa industriya ng insurance (Having a minimum rate will favor the creation of cartels in the insurance industry),” Lee said.
During the rather technical Feb. 21 hearing, the rookie wondered out loud how non-life insurance companies actually competed with each other.
“Paano ba nagko-compete ang mga non-life insurance companies? Pataasan po ba o pababaan ng insurance premiums? Kung pababaan, then why does the want to regulate the minimum rates of insurance premiums? (How do non-life insurance companies compete with each other? Is it based on the who has the highest premiums or the lowest premiums? If it's based on the lowest, then why does the IC want to regulate the minimum rates of insurance premiums?)" Lee asked.
Also 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 percent.
Lee said this was scheduled to be implemented last Jan. 1, but was deferred when he blew the whistle on it. The solon says his move is being supported by the general public; micro, small and medium enterprises (MSMEs); and business groups.
“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? Kasi kung hindi natin ito nakita at walang nagreklamo, tumaas na ito noong Jan. 1 (It's because the hike was supposed to push through last Jan. 1, but I blew the whistle),” he said.
The Bicolano said that while the suspension of the implementation of the said IC circular is a welcome respite for inflation-weary Filipino, there is still a need to scrap the untimely policy as the high cost of catastrophe insurance premiums will inevitably impact the unabated and 14-year record-high inflation in the country.
“Napaka-wrong timing ng polisiyang ito (The timing of this policy is so wrong). This is the reason why we in AGRI Party-list are calling for scrapping this increase in rates. Cancellation, not just suspension. Stoppage, not just postponement,” he added.