By Lawrence Agcaoili

The Finance Department has turned down the request of insurance providers for more time to comply with the minimum capitalization and net worth requirements.

Finance Secretary Margarito Teves said insurance companies in the Philippines must comply with the requirements to prevent a repeat of the financial crisis that battered the Asia-Pacific region in 1997.

“Insurance companies need sufficient capital to survive the crisis,” said Teves.

Insurance companies in the country, represented by the Philippine Insurers and Reinsurers Association, have asked the Finance Department to defer to 2015 the full compliance to the minimum capitalization and net worth requirement, instead of 2011, citing due to the financial meltdown in the United States.

The government in 2006 issued a directive increasing the capitalization requirement of life and non-life insurance companies to make the industry in the Philippines at par with those of neighboring countries.

Under the capital requirement, Filipino-owned life and non-life insurance companies must increase their minimum paid-up capital from P50 million and a minimum statutory net worth of P100 million in 2007 to P250 million and P500 million by 2011, respectively.

Insurance providers were required to increase their paid-up capital to P75 million and their net worth to P150 million by the end of 2008 from the current P50 million worth of paid-up capital and a net worth of P100 million.