MANILA - The Insurance Commission on Monday backed a 60-day moratorium on loan payments under the proposed Bayanihan to Recover as One (Bayanihan 2) Act.
The Insurance Commission which regulates and supervises insurance, pre-need and HMO firms, said a one-year grace period on life insurance and pre-need premium payments as proposed under the Bayanihan 2 bill will "exacerbate the adverse economic effects of the pandemic" on the industry's financial position.
“Life insurance and pre-need companies are still reeling from the effects of the reduced economic activity, which has already resulted in the reduction of premiums collected and earned," said commissioner Dennis Funa of the Insurance Commission.
"We fear that a one-year moratorium will exacerbate the adverse economic effects of the pandemic to said industries’ financial and capital positions, such that said industries may be permanently unable to recoup the consequent losses during this period, even if we were to consider future premiums,” he added.
Under the House of Representative's version of the Bayanihan to Recover as One (Bayanihan 2) bill, the country's second coronavirus response law, is a provision to grant a 365-day moratorium on loans.
The Management Association of the Philippines also supports a 60-day reprieve on loan payments but believes, insurance and pre-need firms must be excluded.
"While the MAP supports the 30-day moratorium under the Senate version, 60 days will be a good compromise provided that it is a one-time and non-extendible payment moratorium," said MAP president Francis Lim.
"The moratorium should also exclude insurance and pre-need companies as they may find it difficult to service claims, especially COVID-related deaths. Pre-need companies have to service the medical and hospitalization claims of COVID patients and the tuition and other educational needs of our children as school opening is just around the corner," Lim added.
Bangko Sentral ng Pilipinas Gov. Benjamin Diokno earlier said the proposed measure might have "unintended consequences that will severely affect the banking industry."