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PLIA ‘accepts’ 60-day premium payments reprieve

The Philippine Life Insurance Association (PLIA) welcomed the move by lawmakers shortening the grace period on premium payments.

In a statement, Benedict C. Sison, PLIA president, said the Bicameral Conference Committee’s 60-day moratorium on life insurance premium payments is a compromise “acceptable” to the industry.

“The 60-day period offers a balanced consideration of the insuring public’s interest as well as that of the insurance companies, who themselves need to ensure their continued ability to service all their commitments to their policyholders,” Sison said.

The two-month reprieve under the Bayanihan to Recover as One bill is a favorable development for life insurers as the bill initially proposed a longer payment moratorium of 365-days, which the industry opposed.

According to Sison, the new provision in the Bayanihan 2, the country’s second coronavirus response law, is equivalent to the minimum grace period granted by the industry during the enhanced community quarantine in March.

For this reason, Sison has also proposed to lawmakers the exemption of insurance companies from the 60-day mandatory grace period under the Bayanihan 2.

Sison explained the exemption would turn out beneficial to their policyholders as steadier premium inflow would become available for investing and generating returns that would assure their readiness to respond to claims especially those related to COVD-19.

 “At this time when people’s health and wealth are a bit more vulnerable, the role of the insurance industry becomes even more important as it helps people mitigate the risks they face,” Sison said.

 “Thus, it is also important that we work towards a balanced solution that would ease the plight of our fellow Filipinos while also ensuring the continued stability of the industries that are there to help them,” he added.

Earlier, Insurance Commissioner Dennis B. Funa warned that the proposal obliging life insurance and pre-need companies to grant one-year moratorium to all policyholders would spell financial danger to protection industry.

Funa said the proposed 365-day moratorium on life insurance and pre-need premium payments would further exacerbate the already adverse economic effects of the pandemic to the business.

“If passed into law, [it] will add to the life insurance and pre-need industries’ challenge of generating as much premiums from its existing business,” Funa said in his letter dated August 12, 2020 to members of the Bicameral Conference Committee of Congress.  “Right now, said industries need to generate such premiums from existing business in order to offset the decline in new business premiums resulting from the slowed market demand,” Funa explained.


Source: Manila Bulletin (https://mb.com.ph/2020/08/19/plia-accepts-60-day-premium-payments-reprieve/?utm_source=rss&utm_medium=rss&utm_campaign=plia-accepts-60-day-premium-payments-reprieve)

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