The Insurance Commission (IC) is monitoring the compliance of Philippine Health Insurance Corp. (PhilHealth) and Philippine Crop Insurance Corp. (PCIC) with the Department of Finance’s (DOF) directive to adopt current Philippine accounting standards.
“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,” Dennis Funa, insurance commissioner, said in his report to Finance Secretary Carlos Dominguez.
In a statement over the weekend, the DOF said that 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.
Dominguez, who is also concurrent chairman of the Social Security Commission, 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 4 (PFRS 4).
Last December, Dominguez directed PhilHealth, SSS and the Government Service Insurance System 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.
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. – Angela Celis
