MANILA, Philippines — Business groups lauded the compromise both houses of Congress reached on the moratorium on debt payments to ease the difficulties of Filipinos during the COVID-19 quarantine in many parts of the country.
Francis Lim, president of the influential Management Association of the Philiplines (MAP), said over the weekend that the 60-day freeze on loan repayments was a good compromise after an earlier version of the Bayanihan to Recover as One Act (Bayanihan 2) proposed a freeze on loan payments for as long as one year.
“While the MAP supports the 30-day moratorium under the Senate version, 60 days will be a good compromise if 30 days is not doable, provided that it is a one time and nonextendible payment moratorium,” Lim said.
But Lim said the law should exempt financial services, like insurance and pre-need companies, whose very survival may be endangered by Bayanihan 2 and add further burdens on the public.
“The moratorium should also exclude insurance and pre-need companies as they may find it difficult to service claims, especially COVID-19-related deaths,” he said.
Life insurers themselves agreed that the compromise was “acceptable” and a “balanced consideration” of the interests of the public and insurance companies.
“At this time when people’s health and wealth are a bit more vulnerable, the role of the insurance industry becomes even more important as it helps people mitigate the risks they face,” said Benedict Sison, president of the Philippine Life Insurance Association (PLIA).
“PLIA recognizes the difficulties policyholders may have in settling their due premiums in these trying times. The 60-day period offers a balanced consideration of the insured public’s interest as well as that of the insurance companies,” added Sison, chief executive and country head of Sun Life Philippines.
Sison noted that the 60-day moratorium was equivalent to the minimum grace period granted by the industry during the enhanced community quarantine declaration in March, representing the 30-day contractual grace period and the extension encouraged by the Insurance Commission.
It would even be better, Sison said, if Congress exempts insurance companies altogether because the steady premium inflow would become available for investing and strengthen businesses.
Insurance Commissioner Dennis Funa made the same arguments when it warned senators and congressmen in a letter on Aug. 12 that a yearlong moratorium would be detrimental to the economy.
“We fear that a one-year moratorium will exacerbate the adverse economic effects of the pandemic to said industries’ financial and capital positions, such that said industries may be permanently unable to recoup the consequent losses during this period, even if we were to consider future premiums,” Funa said in his letter.
The MAP also previously warned lawmakers against a year-long freeze on debt payments because most of the cash held by banks are loaned to the public. By: Ben O. de Vera, Roy Stephen C. Canivel