PIRA Chairman's Report 2016
Getting Smaller, Getting Smarter
By Augusto P. Hidalgo
Good afternoon my dear colleagues in the industry. It is an honor for me to make a report to you as your chairman for the year 2016.
I have entitled this report, "Getting Smaller, Getting Smarter" And the gist of this report is simple: We may be getting small in size, but we are getting smart at what we do. And in the coming years, I hope to make our Association be far smarter than it is right now and finally come up with lasting solutions to the problems that our industry regularly faces.
Now to the details of my report...
As expected, our membership has again declined due to the inability of some companies to meet the capitalization requirement. As of June 2016, our official membership roll includes 67 companies, with a big chance of further decline as the capitalization mark hits P900 million in 2019.
However, despite of this development, I am proud to say that we made major accomplishments and they are all contained in this report.
For starters, we have been actively working with the Insurance Commission through the PIRA Technical Working Group and SGV as consultant in the development of the new Financial Reporting Frameworks.
Several orientation sessions have been conducted by your Association where issues and concerns of the industry were raised for consideration. NMG and the Insurance Commission provided us with the final proposed Frameworks particularly on RBC and Reserving.
Our Technical Working Group has been focusing on this issue for over three years now and we have tapped the services of NMG Consulting and SGV on this. They have presented studies already to you and to the Insurance Commission on the best framework for our industry.
The Insurance Commission, meanwhile, has put this item on hold as it recognizes now the need for further consultation with the industry. For now, I consider this a breakthrough as it will give most of our members the much needed time to get their affairs in order.
We have also increased our collected membership dues through more efficient collection.
In 2015, we billed a total of 23 million, 827 thousand, 124 pesos in membership dues, and we were able to collect 21 million, 627 thousand, 788.99. That's a collection efficiency ratio of 90.77 percent.
Not bad, you may say. But in 2016, with fewer members, we were able to bill membership dues amounting to 29 million, 20 thousand, 484 pesos, and out of that our team was able to collect P27 million, 921 thousand, 614.68.
That's a collection efficiency ratio of 96.213 percent.
We still have receivables of a little over a million pesos from three member companies, but our Finance Committee is already notifying these companies in writing to settle their account payables before the year ends. If they settle their unpaid dues, then we could probably register the highest collection efficiency ratio in PIRA history.
As it is, our collection this year is already six million more than our collection last year. And to prove to you that we have been smarter this year, I am proud to say that we have organized more projects in 2016 but we incurred less expenses.
How did we do that? Simple. When I assumed the chairmanship in the beginning of the year, I encouraged our team to make sure that all our projects, as much as possible, should be self-liquidating.
Of course, we did not expect this policy to be applied to projects involving legal matters or those related to the Insurance Commission. But for special events, our team was able to make them self-liquidating.
For example, the PIRA Motor Car Committee was able to organize the 1st Motor Car Insurance Summit on Insurance Fraud at the Philippine International Convention Center without spending a single centavo.
The PIRA IT Committee also had their IT Innovation Seminar on Digital Marketing and Insurance here at the Asian Institute of Management, with minimal expenses.
And on my part, we were able to organize two international events with the United Nations Environment Programme at the Discovery Suites and SMX Aura, with the bill being shouldered by foreign reinsurers.
I am also proud to tell you that our two biggest events organized by our PR Committee -- the PIRA Regional Dialogue and the PIRA Networking Golf -- both paid for themselves.
There is a saying that nobody rises to low expectations. As your chairman, I raised the expectations on our people and they all measured up. And I have to applaud them for that.
Notwithstanding the stellar achievements of our people this year, still there are a lot of things on our plate that require some extra push. I have listed here seven priority tasks for us to focus on this coming year.
First is our dream of lowering the taxes on non-life insurance.
The bill authored by Davao Congressman Karlo Nograles failed to pass the Committee level in the last Congress. We are pushing for the refiling of this bill, and no less than Deputy Speaker Miro Quimbo, who spoke in our Regional Dialogue, has promised to work on the law that will lower the taxes on non-life insurance.
If this happens, this will be a major victory for all of us. And join me in making a serious commitment to make this a reality before President Duterte steps down from office in 2022.
The second item on our plate is the standardized broker's agreement.
We have been working on this since early this year, but we have yet to see a draft. This is in response to a resolution made in the 2015 Regional Dialogue, and I believe it is about time that we come up with an industry standard for this. I hope those in charge of this can really sit down and put a deadline on themselves to accomplish this. Without a deadline, nothing gets done.
The third item I want us to focus on is our linkages with the Land Transportation Office and the Highway Patrol Group.
I am happy to say that early this year, we were able to sign a Memorandum of Agreement with the Highway Patrol Group on the sharing of data between them and us when it comes to carnapped vehicles.
Also, during the Motor Car insurance Summit, the new LTO Chief has assured that he would no longer regulate insurance. This is a total U-turn from the position of the previous LTO leadership pushing for a Reformed CTPL which rocked our industry earlier this year.
You very well know what happened with this Reformed CTPL. We have a pending case in the courts on this, but it seems the new LTO leadership does not any more want to pursue this. And I hope our industry would see this as a sign of positive change in the government.
Let us follow through with these important breakthroughs. Let us take advantage of the opportunity being offered by the change in administration.
The fourth item we would like to focus on is the long overdue National Catastrophe Pool.
This has been my pet project for several years now. I have talked with various groups about this in the past and this year, I even went to Munich to look for people who can help us develop this pool. We really need to have a NatCAT Pool in this country. I hope our government would heed the call of international experts to create a NatCAT Pool before a major catastrophe hits the country.
Many in our government are convinced that a CATPool is absolutely necessary for our country.
Phivolcs Director Renato Solidum, for example, wants to partner with us in pushing for this NatCAT Pool. So is Project NOAH's Mahar Lagmay and also Secretary Emmanuel de Guzman of the Climate Change Commission. These scientists and technocrats are convinced that insurance has a vital role to play in promoting disaster resilience.
In fact, in the last Top Leaders Forum of the United Nations International Strategy for Disaster Reduction, where PIRA was a major figure, they even had a session on Disaster Risk Financing and their focus was mainly how our industry could make this country more resilient to disasters.
The fifth item on our agenda for the coming year is our goal of attracting more young people to insurance.
The responsibility for this falls squarely on the shoulders of our PR and Education Committees. I understand that these two committees regularly conduct Campus Tours and even did one in Davao City this year. As part of their outreach to schools, our PR and Education Committees also hold Accreditation Courses for college professors teaching insurance. This way, the professors get to understand how important insurance really is and to correct whatever misconception they might have about insurance.
To further boost the interest of young people on insurance, the Insurance Institute for Asia and the Pacific also has its SUITS program which PIRA actively supports. Your companies may have already hired new talents through this program. Let us support it further this 2017.
The sixth item on our plate is about microinsurance. We want to promote microinsurance to our people and also to the region.
In the last ASEAN Insurance Council meetings in Indonesia, PIRA partnered with IIAP in organizing the first ASEAN Managers Microinsurance Course. Initially, we were hoping to get only 40 participants. But we were able to get 71 participants from 10 countries, including India and Bangladesh.
And finally, the seventh item on our list of things to do for 2017 is this: We want to strengthen ourselves and assert our role as the true voice of the non-life insurance industry.
We have written the Insurance Commission already asking it to recognize PIRA on the same breadth as PLIA in the life sector. However, the IC said it would be best if PIRA would seek the status of an SRO or a Self Regulatory Organization instead of just aim to be the official voice of the non-life insurance industry. To do this, PIRA needs to revise its bylaws. We hope to finally get this done in 2017.
The seven things I mentioned are not just pipe dreams but actual things-to-do for all of us. We have a lot of things lined up not only in 2017 but up to 2019. In 2018, we shall be hosting the East Asian Insurance Congress or EAIC. And in 2019, we will play host again to the ASEAN Insurance Council meetings. That is why we should keep on improving.
Since I assumed the chairmanship of PIRA, I have been pushing for metrics to be used in measuring the progress of our efforts. I always believe that only those that are measured improve. So if we want to improve, then we must not be afraid to measure ourselves.
Let us not be content with a positive result at the end of each year. We should all have targets -- us in the Board must have general targets, while each of our committees must have their own respective specific targets and metrics to be used in measuring their targets.
In closing, let me share with you a video of the turnover ceremonies of the ASEAN Insurance Council-PIRA-and Gawad Kalinga housing project for Yolanda survivors.
I was not able to join that event but I am showing this video to you as a fitting reminder of the importance of our role as insurers in a disaster-prone country and a poor country such as ours.
May this video touch your heart as it touched mine.
It has been an honor serving you as PIRA chairman.
Thank you very much.