UnionBank of the Philippines selects Avaloq

Digital transformation in banking

UnionBank of the Philippines selects Avaloq to transform its wealth management platform

UnionBank of the Philippines selects Avaloq to transform its wealth management platform UnionBank continues the digital transformation of its wealth management business with the Avaloq Core Platform. This will help the bank to stay ahead of the technology curve as the financial industry continues to digitalize in the pursuit of greater efficiency and innovation.

Avaloq is implementing its core banking system at UnionBank, a digital trailblazer in the Philippines’ financial sector. The bank’s wealth management business serves the entire wealth spectrum, including business leaders, entrepreneurs and philanthropists across the Philippines. Avaloq’s core banking platform will support UnionBank in offering its clients access to holistic wealth management services, such as family wealth structuring, philanthropy and sustainability advice as well as professional succession planning. And following UnionBank’s recent acquisition of Citi’s Philippine Consumer Business, the bank can also provide an enhanced retail offering with investment and insurance brokerage.

With the introduction of the Avaloq Core Platform, UnionBank can seamlessly automate and standardize aspects of the front, middle, and back office of its wealth management functions, such as client relationship management, compliance, and payment processing. Avaloq’s comprehensive core banking system covers the needs of all client segments in wealth management and is fully customizable, with dedicated modules for client life cycle management, regulatory reporting, accounting and other key processes.

Jose Emmanuel “Toto” Hilado, SEVP and Treasurer& Center Head –Global Markets Group at UnionBank, said: “We opted for Avaloq’s core banking platform, as it offers the most efficient and comprehensive features to cover our wealth management needs. Underpinned by Avaloq’s strong local presence and reputation in the Philippines, we are confident that migrating our wealth management platform to Avaloq will help us remain at the cutting edge of digitalization and innovation. With the Avaloq platform, UnionBank is positioned to compete not only locally but globally in delivering world-class wealth management products and services to our customers.

”Gery Dachlan, Managing Director South Asia and Australia at Avaloq, said: “We are impressed by UnionBank’s commitment to the digitalization of wealth management. The Avaloq platform will play a key role in this ongoing transformation, as it is designed to efficiently scale and expand wealth management businesses internationally. We are excited to support UnionBank in providing highly personalized wealth management services with a superior client experience.” (PR)

About Avaloq

Avaloq is a global leader in digital banking solutions. Its core banking platform and wealth management technology are delivered through Software as a Service (SaaS) and on-premises models. Avaloq’s Business Process as a Service (BPaaS) offers a high degree of automation to boost back-office efficiency. More than 150 banks and wealth managers worldwide trust Avaloq for its innovative products and reliable services. Avaloq is a subsidiary of NEC Corporation, a global leader in the integration of IT and network technologies. http://www.avaloq.com

ARMY RESERVISTS LIFE INSURANCE COVERAGE NOW ON ITS 3RD YEAR

Life insurance ….

Army reservists life insurance coverage now on its 3rd year

Davao City (August 25, 2022) –The family of the late Sgt Dennis A Sardoncillo PA (RES) of the 2202nd Ready Reserve Infantry Brigade, PA was just one of the families that has availed of the insurance coverage of the Armed Forces and Police Mutual Benefit Association, Inc. or AFPMBAI, said COL ISIDRO T UNGAB PA (GSC) RES, the unit’s Brigade Commander.

COL UNGAB said that the insurance was first implemented at the height of the pandemic in 2020. He said that the troops were deployed in the different vital installations then and were so exposed as they enforce our government’s health and safety protocol. “We wanted to give them extra protection because they are doing extra-ordinary service to our country.”

Today, CPT EARLE D FERRER JR PA (RES) officially handed over the list of 195 Army reservists who will be insured with the AFPMBAI from September 01, 2022 to August 31, 2023, which is now on its third year.

The Army reservists belong to the 2202RRIBde and the 1105th Ready Reserve Infantry Battalion, PA under the command of LTC RODRIGO L RIVAMONTE PA (GSC) RES. (PR)

#AFPyoucanTRUST

PCIC under the supervision of Insurance Commission

State-run agricultural insurance firm

PCIC under the supervision of Insurance Commission

Finance Secretary Carlos Dominguez III has placed the Philippine Crop Insurance Corp. (PCIC) under the supervision of the Insurance Commission (IC) to empower the latter to regularly examine the financial affairs, condition, and method of business of the state-run agricultural insurance firm. 

With Department Order No. 038.2022 signed on June 28, Dominguez said the results of the examination conducted on the PCIC “shall be submitted by the IC to the DOF (Department of Finance).” 

In September last year, President Duterte issued Executive Order (EO) No. 148 transferring the PCIC from the Department of Agriculture (DA) to the DOF as an attached agency “for policy and program coordination and general supervision.” 

The PCIC Board was also reorganized under EO 148 with the DOF Secretary as chairperson. 

Based on this presidential directive and under Section 253 of the Insurance Code, as amended,  which mandates the IC to conduct an examination into the affairs, financial condition and method of business of government-owned and -controlled corporations (GOCCs) engaged in social or private insurance, Dominguez placed the PCIC under the regulatory oversight of the IC. 

“In view of the foregoing, the PCIC is hereby placed under the supervision of the IC. The IC is hereby directed to conduct an examination into the affairs, financial condition, and method of business of the PCIC every three (3) years, or as often as may be directed by the Insurance Commissioner or the Secretary of Finance. The results of such examination shall be submitted by the IC to the DOF,” Dominguez said in his DO.

The Order takes effect immediately. 

Earlier, a World Bank (WB) study recommending reforms in the PCIC has found that the state-run firm’s current approach to agricultural insurance neither provides value for money to taxpayers nor adequate protection to farmers. 

The PCIC is also “very exposed to catastrophe losses which are not reinsured,” said the study done by a team from the WB’s Disaster Risk Financing and Insurance Program (DRFIP). 

This study, which was presented recently to the PCIC Board, revealed that while premium subsidies given by the government to the PCIC grew rapidly over the years, agricultural insurance has only reached one-third of the country’s farmers and is not well-targeted to ensure that taxpayers are getting value for their money. 

The study also found that PCIC’s premium rating, capital management,  financial reporting, and other aspects of its operations are not in line with international best practices. 

PCIC’s insurance products are also not suitable for majority of Filipino farmers, especially for small subsistence holders and growers, the study showed.

IC forms teams to audit social insurance institutions on compliance with global accounting standards

Comply global accounting standards

IC forms  teams to audit social insurance institutions on compliance with global accounting standards

The Insurance Commission (IC) has formed project audit teams to ensure that the country’s social insurance institutions are adopting the globally accepted Philippine Financial Reporting Standards 4 (PFRS 4), in compliance with the instructions of Finance Secretary Carlos Dominguez III. 

IC Commissioner Dennis Funa said in his report to Dominguez that the audit to monitor the compliance with PFRS 4 covers the Government Service Insurance System (GSIS), Philippine Health Insurance Corp. (PhilHealth), and the Social Security System (SSS). 

Funa said the audit teams will begin their tasks of auditing the GSIS next month, the SSS in September and PhilHealth in October. 

“We shall provide the Secretary of Finance the respective final audit reports immediately after the endorsement and approval from the Insurance Commission Executive Committee,” Funa said in his report. 

In December last year, Dominguez ordered SSS, GSIS and PhilHealth to fully adopt PFRS 4, which  provides guidance on the proper financial accounting of insurance contracts. 

PFRS 4 is the current and interim accounting standard imposed on insurance entities in the Philippines that is based on International Financial Reporting Standards (IFRS). 

All private insurance companies in the Philippines have been using PFRS4 since 2005.

Dominguez issued the directive after a comprehensive review conducted by the Department of Finance (DOF)  led by Undersecretary Antonette Tionko, and with the assistance of the International Monetary Fund (IMF), revealed that these institutions were not adopting internationally accepted accounting principles in their financial reporting and management of their social benefit liabilities. 

With the government social institutions’ full compliance with the PFRS 4, their combined total liability have increased to P9.94 trillion in 2020 from P154 billion in 2019.  

The increase in liabilities is primarily because of the proper booking of their  social benefit liabilities, as required under PFRS 4.

Dominguez has assured members of SSS, GSIS and PhilHealth that the booking and reporting of  the social benefit liabilities under PRFS4  do not affect the  cash flow and funding status of these institutions, and that they remain fully capable of meeting their  short- and long-term obligations. 

To improve the management of the funds and maximize the return on investments  in these institutions, the DOF has recommended that these resources be  pooled to  constitute a sovereign wealth fund, which is  the practice of many countries, including Singapore, Japan and Indonesia.

Dominguez said his  directive for these institutions to fully adopt PFRS 4 is  “in line with the Duterte administration’s efforts to ensure that the financial reports of social insurance institutions  are transparent and based on facts.” 

Adopting PFRS 4 in their financial reporting will ensure that SSS, GSIS and PhilHealth would be able to provide their management  and the national  government with an “accurate picture of the funding reality of these institutions,” Dominguez said. 

IC reports P2.93-B Covid insurance claims in Q1 2022

IC reports P2.93-B Covid insurance claims in Q1 2022

Insurance claims related to COVID-19 amounted to P2.93 billion in the first quarter of this year, with life insurance benefits accounting for 61 percent or P1.79 billion of the payouts, according to data from the Insurance Commission (IC). 

IC Commissioner Dennis Funa said in his report to Finance Secretary Carlos Dominguez III that 32 percent or P948 million of these claims were from the health maintenance organizations (HMO) sector; while non-life insurance payouts accounted for 5 percent or P145 million; and mutual benefit associations (MBAs), 2 percent or P49.4 million. 

“These claims were for death,  hospitalization, outpatient, and other benefits,” said Funa in his report during a recent Department of Finance (DOF) Executive Committee (Execom) meeting. 

The IC said 20 percent, or P3.89 billion, of COVID-related claims were paid from the beginning of the pandemic in March 2020 up to end-2020. Meanwhile, 65 percent, or P12.82 billion, were paid in 2021; and 15 percent, or 2.93 billion, in the 1st quarter of 2022. 

From 2020 until 1st Quarter of 2022, COVID-19 related Insurance claims reached P19.64 billion, with payments made by the life insurance industry accounting for more than half or around P10.84 billion of the payouts. 

Funa said the rest of the pandemic-related insurance claims from 2020 to the 1st quarter of 2022 were from HMOs with a 37 percent share at P7.39 billion, MBAs with a 5 percent share at P882 million, and non-life policies with 3 percent or P527 million. 

Of the total pay-out of all COVID-19-related insurance benefits, the amount P9.72 billion in claims corresponds to about 33,624 death benefits.

He said during the Execom meeting that while COVID-19-related claims in 2020 and 2021 appear to be a staggering amount, they account for only 10 percent of the total benefit payments during these years.

COVID-related claims made up only 3 percent of payouts in 2020, and 7 percent in 2021. 

In 2020, payouts for other benefit claims amounted to P120.76 billion or 97 percent of the total payouts, Funa said. 

For 2021, he noted that the insurance industry paid P159.68 billion in claims unrelated to COVID-19, or 93 percent of the total payouts for the year.

PDIC hastens deposit insurance claim settlement, trims non-cash portfolio in 2021

Deposit insurance claim ….

PDIC hastens deposit insurance claim settlement, trims non-cash portfolio in 2021

The use of digital platforms enabled the Philippine Deposit Insurance Corp. (PDIC) to significantly cut its clearing time in settling a total of 19,184 deposit insurance claims and in resolving over 30,000 loan accounts in closed banks in 2021. 

In a report to Finance Secretary and PDIC Board Chairman Carlos Dominguez III, PDIC President and CEO Roberto. Tan said deposit insurance claims filed last year involving 10 banks with no more than 3,000 accounts each were settled in 17-22 working days, significantly faster  over its target of 27 working days. 

Meanwhile, all deposit insurance claims filed in two larger banks with over 3,000 to 10,000 accounts each were settled in 37 to 40 working days, an improvement over its target of 41 working days.

Additionally, the PDIC chief also reported that insured deposits paid in closed banks grew from P219.68 million in 2020 to P471.15 million in 2021. 

In cleaning up its non-cash portfolio, Tan disclosed that the 30,384 loan accounts resolved in 2021 were 70 percent higher than its target of 17,826 loan accounts for a three-year period from 2019 to 2021.  The PDIC has resolved a total of 79,474 loan accounts. 

Tan also said the PDIC’s target of disposing of 807 real properties also improved as it completed the disposal of 1,141 real properties in 2021— bringing total asset disposal to 3,551 properties since 2019. 

The PDIC manages a total inventory of 32,000 real properties and a five-year asset disposal program has been drawn up to expedite the disposal process. 

The PDIC  President reported that the corporation continued last year the implementation of electronic filing and payment arrangements to settle deposit insurance claims; and electronic bidding of properties as a new normal approach to asset disposal. 

These online channels include the web-based claim form made available by the PDIC on its website; and payment channels such as PesoNet, Instapay, and other electronic money issuers.

“We also continued the use of digital media platforms and local information networks to provide prompt and continuing information to depositors and other clients,”  Tan said in his report.

He said the implementation of PDIC’s Closed Bank Loan Incentive Program (CLIP), which offers easy payment and zero penalty initiative to borrowers of banks that were ordered closed by the Monetary Board (MB), also helped speed up the resolution of loan accounts. 

CLIP offers substantial discounts to closed-bank borrowers with principal loan balances of P1 million and below and who will opt to pay through a one-time cash settlement.

Tan said the PDIC under the Duterte administration will continue to expand the use of electronic modes of settling deposit insurance claims as part of the Corporation’s digitalization efforts. 

Aimed at further improving its customer services and operational efficiency, the PDIC completed the implementation of 7 of its 16 major information and communications technology (ICT) projects in 2021. 

The Corporation also contributed in improving the ease of doing business as it initiated the streamlining of interagency processing of proposed mergers, consolidations, and acquisitions of banks,  cutting almost half the number of documentary requirements from 58 to 30, and shortening the processing time from 160 to 55 days.

The PDIC likewise reported  that the strength of its Deposit Insurance Fund (DIF) continued to be built up, increasing the DIF level by 13.8 percent from P214.44 billion in 2020 to P243.87 billion in 2021.  

Meanwhile its corporate assets stood at P305.86 billion, or 12.4 percent higher than the P272. billion in 2020. 

Assessment collections from banks also  grew by 8.3 percent from P27.52 billion in 2020 to P29.81 billion in 2021. 

Philippine healthcare benefit costs to increase by average of 14.4% in 2022 says Willis Towers Watson

Health care benefits

Philippine healthcare benefit costs to increase by average of 14.4% in 2022 says Willis Towers Watson

MANILA, PHILIPPINES — Employer-sponsored healthcare benefit cost trends are expected to increase by 14.4% on average in the Philippines in 2022, according to a survey of medical insurers. Willis Towers Watson (NASDAQ: WLTW), a leading global advisory, broking and solutions company, conducted the 2022 Global Medical Trends Survey. The projected healthcare benefit costs declined in 2020 at 6.4% before rebounding to 16.4% in 2021.

In Asia, costs are expected to increase by 7.6%. With COVID-19 surging in different countries at various times in 2020 and 2021, survey results showed the pandemic’s asymmetrical arc created considerable volatility in healthcare utilization and costs around the world.

Global medical trends: Healthcare benefit cost growth, 2020 – 2022

	2020	2021	2022 projected
Global+	4.8%	8.1%	8.1%
Asia Pacific	5.4%	7.0%	7.6%
Australia	2.8%	5.0%	4.3%
China	5.5%	7.2%	8.3%
Hong Kong	6.5%	6.8%	8.2%
India	18.5%	25.0%	23.5%
Indonesia	6.2%	7.0%	7.4%
Malaysia	9.5%	7.7%	16.2%
New Zealand	2.0%	9.4%	6.9%
Philippines	6.4%	16.4%	14.4%
Singapore	7.7%	8.6%	9.0%
South Korea	3.7%	0%	2.7%
Taiwan	5.8%	5.8%	6.8%
Thailand	9.0%	11.3%	9.2%
Vietnam	5.3%	7.0%	9.0%

⁺Global and regional trend rates are weighted based on GDP per capita. (Due to the hyperinflationary nature of the Venezuelan economy, Venezuela has been excluded from Latin America regional and global totals.)

“COVID-19 has produced the biggest impact to global medical trend variation the industry has seen, and we expect the resultant repercussions and volatility to extend into 2022 and beyond,” said Cedric Luah, Head of Health and Benefits, International, Willis Towers Watson. “Markets and employers are feeling the impact differently. Some have experienced the recovery’s demand for regular medical services in 2021, while others will see it next year or after. The pandemic, combined with the changing face of work, has had a significant effect on healthcare needs, delivery of services and the future drivers of medical claims, which in turn will have impact on medical inflation trends.”

The leading driver of medical costs continues to be overuse of care (64%) due to medical professionals recommending too many services or overprescribing. Excess of care by insured members (59%) is the second leading driver. The underuse of preventive services (38%) is also a significant cost driver and increased year-over-year due to, in part, the avoidance of medical care during the pandemic.

Insurers in APAC named cancer (76%), cardiovascular (62%) and musculoskeletal (48%) as the top three conditions by cost, identical to last year’s findings. They have also ranked musculoskeletal, and mental and behavioural disorders as two of the fastest growing conditions by cost they expect to see over the next 18 months.

“COVID-19 has caused volatility in the trend numbers and in the leading causes of claims. The sedentary lifestyle that often accompanies working from home has also increased the risk of musculoskeletal injuries. For the first time ever, we are seeing musculoskeletal conditions as the leading claim incidence globally. As most employers can attest, mental health claims are also on the rise,” said Cedric.

Susan La Chica, Head of Health & Benefits, Philippines, WTW also added: “The mental wellbeing of employees continues to be a key employer focus. In the Philippines, the healthcare system has also pivoted to include virtual mental wellbeing support, largely to ensure that employees receive the quality healthcare support they need as they continue to work from home, both virtually and physically. Employers are also reviewing how wellbeing solutions, in general, can be incorporated as a core benefit item, seeking support from insurers or solutions provider like us.”

According to the survey, almost four in 10 insurers (35%) identified the addition of new wellbeing services as the biggest change organizations in APAC have made to their medical portfolios in 2021. This is followed by telehealth services (26%), underscored by the potential for cost reductions that virtual healthcare creates. Half of the insurers now offer telehealth across select plans, with 92% offering these services at no additional cost.

“It is likely that the adoption of telehealth will continue post-pandemic. In fact, the role of telehealth will continue to evolve not only as a digital platform for ease of access to the right care but also as an effective way to close the gap in accessing healthcare services. In addition, we expect the scope of services provided by these health-tech to expand further into wellbeing offerings, including but not limited to mental health services, given the impact of COVID on emotional wellbeing of employees,” said Susan. (PR)

About the survey

Willis Towers Watson conducted its 2022 Global Medical Trends Survey between July and September 2021. A total of 209 leading insurers representing 61 countries participated in the survey, including 13 markets in Asia Pacific.

About Willis Towers Watson

Willis Towers Watson (NASDAQ: WLTW) is a leading global advisory, broking and solutions company that helps clients around the world turn risk into a path for growth. With roots dating to 1828, Willis Towers Watson has 45,000 employees serving more than 140 countries and markets. We design and deliver solutions that manage risk, optimize benefits, cultivate talent, and expand the power of capital to protect and strengthen institutions and individuals. Our unique perspective allows us to see the critical intersections between talent, assets and ideas — the dynamic formula that drives business performance. Together, we unlock potential. Learn more at willistowerswatson.com.

Dominguez asks PCIC to present financial status, contingent liabilities

Agriculture, crop insurance

Dominguez asks PCIC to present financial status,  contingent liabilities

Finance Secretary Carlos Dominguez III has asked the management of the Philippine Crop Insurance Corp. (PCIC) to present before its newly reorganized board of directors this October 7 the state firm’s financial status and computation of its contingent liabilities. Dominguez said the presentation should include an outline on how the PCIC should be managed and initial ideas about possible reinsurance coverage, which PCIC can provide; the expansion of the insurance coverage to include more crops; and how PCIC can provide parametric insurance compared to its current policies. 

During the first meeting held on Sept. 24 by the reconstituted PCIC board, Dominguez said among the immediate tasks of the body was to reorganize the corporation, stop its financial bleeding and determine how it can deliver better insurance coverage to Filipino farmers.

Dominguez, who now chairs the PCIC board, pointed out that the PCIC has been heavily reliant on substantial subsidies from the national government for the past 20 years.

During this period, the government has extended over P23.3 billion in subsidies through the national budget and pumped in an additional P5.3 billion into the PCIC from the Agri-Agra Fund since 2015, Dominguez noted. 

For 2022, the proposed subsidy to the PCIC amounts to P4.5 billion. 

He said this “trend is not sustainable” and that the board should find ways to ensure that the PCIC’s primary stakeholders—the Filipino farmers—get the most value for their money from the insurance premium subsidy which the PCIC receives from the national government.

Thus, for the next board meeting, Dominguez asked the PCIC management “to give us a presentation on what is actually the financial status of the Corporation” and its “computed contingent liabilities.” 

GSIS president-general manager Rolando Macasaet suggested that the PCIC look into the possibility of adopting Philippine Financial Reporting Standards 4 covering insurance contracts so that the firm can properly prepare its financial statements.  

During the Sept. 24 meeting, the Board appointed lawyer Joyce Briones of the DOF Legal Affairs Office as the new PCIC Corporate Secretary.

The new Board is now composed of Secretary Dominguez as chairperson, Agriculture Secretary William Dar as vice chairperson. PCIC president Jovy Bernabe, Land Bank of the Philippines (LandBank) president-CEO Cecilia Borromeo and Macasaet as members. 

One representative each from  the private insurance industry, and the subsistence farmers’ sector (preferably representing agrarian reform beneficiaries/cooperatives/associations) have yet to be appointed to complete the composition of the seven-person body. 

Given the new composition of the PCIC board of directors, the Board also reconstituted its Committees on Governance and on Audit and Risk Management. 

For the Committee on Governance, Dominguez is the chairperson, while Macasaet and Dar are vice chairperson and member, respectively. 

This committee will oversee the periodic performance evaluation of the board, its committees and management; and will recommend to the board, among others, the continuing education of directors, and assignments to board committees. 

For the Committee on Audit and Risk Management, Borromeo was elected as chairperson, while Dar was named vice chairperson and Macasaet as member. 

On top of developing a transparent financial management system for the PCIC and performing oversight risk management functions, this committee is also tasked to oversee, monitor and evaluate the internal control system of the corporation and coordinate with the Commission on Audit (COA); and review and approve the audit scope and frequency, the annual audit plan, financial statements and reports of auditors, and ensure that the management is taking appropriate corrective actions. 

During the Sept. 24 meeting, Dominguez underscored the need for the PCIC to adopt a new business model and come up with “the most competent management”—to ensure that its operations remain sustainable, if not totally subsidy-free. 

To  address the PCIC’s urgent concerns, “the PCIC must be run by insurance industry professionals and guided by the best actuarial advice,” Dominguez said. 

The PCIC should engage the services of an Insurance Commission (IC)-accredited actuary in performing the valuation of its actuarial reserve liabilities, Dominguez said. 

Dominguez pointed out that the PCIC should provide increased insurance coverage to farmers with lower premiums, while determining how much the government is losing because of the lack of adequate insurance coverage in the agricultural sector.

Executive Order (EO) No. 148 issued by President Duterte on Sept. 14 reorganized the Board of Directors of the PCIC and transferred its attachment from the Department of Agriculture (DA) to the Department of Finance (DOF) “to ensure that its operations are rationalized and monitored centrally in order that government assets and resources are used effectively, and the government’s exposure to all forms of liabilities, including subsidies is warranted and incurred through prudent measures.”