Question & AnswerQ&A (IC CIRCULAR LETTER NO. 5-2005)
They are required to secure a minimum amount of catastrophe excess of loss reinsurance protection equivalent to five percent (5%) of their aggregate net retained insured values against Earthquake, Typhoon, and Flood under Zone A or Zone B, whichever is higher.
It applies to all companies licensed to write Fire and Allied perils insurance in the Philippines.
The purpose is to ensure that insurance companies have adequate reinsurance coverage to protect against large-scale losses from catastrophic events like earthquakes, typhoons, and floods.
Companies must submit a duly accomplished form for the rolling 12-month aggregate as at March 31, June 30, September 30, and December 31 of each year, starting from December 31, 2004, within 45 days after each period.
Companies must submit copies of their reinsurance contracts along with the security rating of the reinsurers not later than March 31 of each year.
The protection must cover insured values against catastrophic events under either Zone A or Zone B, whichever zone has the higher aggregate net retained insured values.
The first report, as at December 31, 2004, was to be submitted within 45 days after the end of December 2004 and quarterly thereafter.
The deadline was extended to April 30, 2005 due to time constraints.
The Commission may examine the records of the companies whenever deemed necessary to verify report accuracy.
Compliance is a prerequisite for the renewal of the company's certificate of authority to operate.