In August 2013, President Benigno S. C. Aquino III signed into law Republic Act No. 10607, otherwise known as “The Amended Insurance Code,” which revised the 1978 Insurance Code and brought it up to date with the current business environment. The Amended Code introduced a number of significant changes, one of which is the change in the valuation of the life insurance companies’ policy liabilities, which under Section 216, should be prescribed by the Commissioner of the Insurance Commission (IC) in accordance with internationally accepted actuarial standards. On Oct. 30, 2014, the IC issued Circular Letter No. 2014-42-A, “Valuation for Life Insurance Policy Reserves,” pursuant to which life insurance companies and mutual benefit associations will be changing the basis of valuation of their life insurance reserves from Net Premium Valuation (NPV) to Gross Premium Valuation (GPV).
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