The Insurance Commission (IC) is closely monitoring the compliance of the Philippine Health Insurance Corp. (PhilHealth) and the Philippine Crop Insurance Corp. (PCIC) with the directive of the Department of Finance (DOF) to adopt current Philippine accounting standards.
Under the Duterte administration, a comprehensive audit of the books of the Social Security System (SSS) has also been completed by the IC, the first time that the pension fund’s financial condition was examined by the Commission.
IC Commissioner Dennis Funa said the audit of the SSS for the year ending 2017 was completed in 2020.
“The IC is now closely monitoring the compliance of PhilHealth and PCIC after our initial findings were transmitted to them last year. We will continue to monitor the compliance of PhilHealth and PCIC with the recommendations made after the examination is completed,” Funa said in his report to Finance Secretary Carlos Dominguez III.
Dominguez, who is also concurrent Chairman of the Social Security Commission (SSC), commended the IC for its examination of the financial condition of the SSS, which has led to the pension fund’s adoption of the Philippine Financial Reporting Standards (PFRS) 4.
Last December, Dominguez directed PhilHealth, SSS, and the Government Service Insurance System (GSIS) to estimate their social benefit liabilities in accordance with PFRS 4 beginning 2020.
As chairman of the board of PCIC, Dominguez also directed the state-run corporation to adopt PFRS 4 in submitting its financial reports.
PFRS 4 is the current and interim accounting standard imposed on insurance entities in the Philippines. It is based on the International Financial Reporting Standards (IFRS).
Under PFRS 4, when an insurance entity receives money from its clients and enters into a contract with them to provide benefits when certain events occur, it must set aside a reserve to cover its liabilities.
Thus, premiums, fees, and contributions that the institutions receive must be reported both as income and liability, Dominguez said.
The examination by the IC of the financial condition of SSS and GSIS is mandated in their respective charters.
Other government insurance institutions such as PhilHealth and PCIC are also subject to the IC’s examination.
Funa said in his report to Dominguez that the IC has also issued a circular last year to ensure that insurance entities remain consistent in complying with globally-accepted regulatory standards.
The IC has allowed the online submission of reportorial requirements, adopted an electronic payment system, and is now in the process of putting in place a shared cyber defense solution with other government insurance institutions, among its other digitalization initiatives.
In 2021, the IC also issued circulars on the rules of procedure in the investigation of unlicensed entities doing insurance, pre-need, and other related activities; the rules of procedure on administrative cases against insurance companies, pre-need firms, health maintenance organizations (HMOs), and other IC-regulated entities; and guidelines to ensure that qualifying examinations for insurance agents continue to be conducted during the pandemic through the use of digital technology.
Funa said the IC likewise released new guidelines expanding the scope of foreign-currency-denominated investments to recognize new investment products in the market and quickly adopt trends and developments in the global financial sector.
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