The Insurance Commission (IC) should enhance its protection measures for consumers by building on the reforms and better regulatory capacity that it has put in place in recent years to avoid a repeat of the “ugly episodes” in the past when several preneed companies failed in succession, Finance Secretary Carlos Dominguez III said.

In his remarks at the agency’s 68th anniversary celebration, Dominguez also called on the IC to gear up for an insurance industry boom that will be one of the positive outcomes of the expected long period of growth on the Duterte watch.

With the IC’s primary job of assuring consumers of insurance products that their investments are safe, the Commission should help rebuild the public’s faith in companies that sell them insurance or pre-need products, Dominguez said.

“We have gone through ugly episodes in the past. One particularly troublesome episode was when several pre-need companies failed in succession. We have yet to arrive at a final verdict on whether these failures were due to bad management of the providers or bad policy on the part of government,” Dominguez said.

“At any rate, thousands of consumers, paying premiums with their hard-earned money, lost their valuable savings. That injury should not happen again,” he told IC officials and employees led by newly appointed Commissioner Dennis Funa.

Dominguez was referring to the near collapse of the pre-need industry over a decade ago, when a law lifting the cap on school tuition fees was enacted, making it difficult for many local pre-need firms, which sell mostly education plans, to meet the burgeoning costs of their maturing contracts.

“I am sure that because of the reforms instituted by the Insurance Commission and better regulatory capacity, the chances for failure have been dramatically diminished,” Dominguez said at the recent IC anniversary program at the IC main office in Manila.

“We have to build on these reforms. We have to rebuild the faith of our people on companies that sell them insurance or pre-need products. That is always a challenging job, to be sure. But I have faith that the Insurance Commission will perform its regulatory role abiding by the highest standards,” he said.

Assuring consumers of the soundness of the products sold in the industry is just half of the IC’s job though, Dominguez said, as the Commission must also ensure that insurance companies provide their clients with fairly priced premiums.

“When premiums are overcharged, the cost of the products could be pushed beyond the reach of most consumers who need the protection these products otherwise bring,” Dominguez said.

He said the IC, for one, should look into the insurance coverage offered for vehicles and residential properties supported by the PAG-IBIG Fund that often involve “unreasonable premiums. ”

“Insurance and pre-need industries are inherently risk-based businesses. They also involve arcane actuarial computations not readily clear to consumers patronizing these businesses. By merely tweaking on these actuarial computations, huge profits could be made at the expense of consumers,” Dominguez said.

Following the pre-need crisis, the insurance industry began to prosper, with assets growing to P1.32 trillion as of September 2016, which translates into a 21.27 percent increase over the same period in the previous year.

The insurance industry contributed P19.38 billion in 2015 through premium taxes.

“This is a remarkable achievement. The Insurance Commission should take part of the credit for this booming sector of the economy,” Dominguez said.

“We can only expect more dramatic growth in the insurance business as our economy is poised for a long period of high growth. Both the Insurance Commission and our industry partners should gear up for this,” he added.

In his speech, Dominguez also discussed how the Duterte administration intends to sustain the economic expansion that is responsible for the nascent blooming of the insurance industry.

He cited President Duterte’s “AmbisyonNatin 2040” growth strategy that envisions a Philippines as a “prosperous, predominantly middle class society where no one is poor.”

“This might seem an ambitious goal. But, I assure you, the goal is a reachable one,” he said.

The strategy, according to Dominguez, requires closing the infrastructure gap, strengthening institutions of governance, building a high-trust society and sustaining the pace of growth of 7 percent or better over the medium term through the enactment of the government’s Comprehensive Tax Reform Program (CTRP).

“This (tax reform) program is our only chance to convert all the beneficial trends we see today into a comprehensive driver for inclusive growth,” Dominguez said.

He called on the IC to back the CTRP, which aims to, among other initiatives, lower personal income tax rates while reducing the rates for estate and donor’s taxes, expanding the value-added tax (VAT) base but retaining the exemptions enjoyed by senior citizens and persons with disabilities, and adjusting automobile and fuel excise taxes.

Complementary reforms to this tax reform package include introducing a sugar-sweetened beverage tax, indexing the motor vehicle user’s charge to inflation, and granting an amnesty to past estate tax cases along with implementing fuel marking and monitoring system to prevent oil smuggling and not only to collect the correct taxes but also to ensure that only high-quality petroleum products and not adulterated ones are sold in the market; the use of e-receipts; the mandatory link of the point-of-sale (POS) systems of establishments directly to the BIR; and the relaxation of bank secrecy laws for investigating and combating tax fraud.