The country’s insurance industry is supporting a legislative proposal to impose a 60-day grace period for premium payments amid the pandemic. Philippine Life Insurance Association (PLIA) President Benedict Sison said he finds the proposed two-month reprieve as a compromise provision in the ‘Bayanihan to Recover as One Act’ acceptable.
“PLIA recognizes the difficulties policyholders may have in settling their due premiums in these trying times,” Sison said in a statement. “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.”
“However, exempting insurance companies from this 60-day mandatory grace period would also turn out beneficial to our 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 Covid-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. 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 said.
The House of Representatives originally filed a version of the ‘Bayanihan 2’ Bill (House Bill No. 6953) that will require life insurance and pre-need companies to impose a one-year or 365-day grace period on premium payments, a staggered payment schedule, or any mutually beneficial arrangement for premium payment. The Senate version (Senate Bill No. 1564), on the other hand, proposes a 30-day grace period on premiums instead.
This led Insurance Commissioner Dennis Funa to appeal to the members of the Bicameral Conference Committee of Congress to consider a proposed alternative to the length of reprieve for premium settlements. In a letter addressed to the committee dated August 12, 2020, Commissioner Funa suggested a 60-day grace period instead (comprising of a proposed 30-day extension to the usual and existing 30-day contractual grace period from the Bayanihan 1 law passed in March).
“We firmly believe that this proposed alternative achieves a balancing of interests,” Commissioner Funa said in his letter. “The suggestion affords both life insurance and pre-need customers, as well as life insurance and pre-need companies, much-needed relief from the adverse economic and financial effects of the Covid-19 pandemic.”
“It will help ensure the continued ability of life insurance and pre-need industries to service their commitments to and respond to the needs of their customers in these trying times,” he added.
Commissioner Funa warned that a one-year moratorium on premium payments may “exacerbate the adverse economic effects of the pandemic” to life insurance and pre-need companies’ financial and capital positions. He further emphasized that the industries may permanently be unable to recoup the consequent losses during this period.
The Bayanihan to Recover as One Act or Bayanihan 2 bill is expected to be ratified before the end of the month.