Nonlife insurers to adopt uniform charge on calamity products

The Insurance Commission (IC) has ordered a uniform charge on nonlife insurers’ catastrophe products starting April next year under the pooled Philippine catastrophe insurance facility (PCIF) to be established this year.

“All nonlife insurance companies shall adopt and implement the new rates and rating structure and apply to all insurance policies, which provide cover for catastrophe risks, with effective term beginning April 1, 2022, new and renewal business,” Insurance Commissioner Dennis Funa said in Circular Letter (CL) No. 2021-27 issued this week.

“In consideration of the existing reinsurance arrangements of the nonlife insurance companies on their catastrophe risks exposures, the cessions to the PCIF shall commence no later than April 1, 2022,” Funa added.

Catastrophe insurance facility

The IC, the Philippine Insurers and Reinsurers Association, and the National Reinsurance Corporation of the Philippines are currently creating the PCIF, under which nonlife players have agreed to a “compulsory cession of an agreed proportion of each and every earthquake, typhoon and flood risk” to the facility,” Funa said.

In turn, Funa said the PCIF would retrocede these risks to subscribing authorized companies.

The Department of Finance (DOF), to which the IC is an attached agency, last February said the PCIF would be rolled out this year.

First private sector facility

The DOF had said the PCIF would be “the Philippines’ first private sector-led catastrophe insurance facility that is designed to heighten the country’s financial resilience against natural disasters.”

“The PCIF would allow nonlife insurers to cede their catastrophe risks to this insurance pool or facility, which will then share the pooled risks back to the nonlife insurers, [to] enable these companies to more efficiently manage their catastrophe exposures and boost their capacity to take in more catastrophe risks,” the DOF had said.