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New Philippine Insurance Requirements to Impact Hong Kong

Posted on Nov 10, 2010 by Sergio Ulloa ()

The compulsory Philippine insurance coverage scheme took effect on the 8th of November 2010. This means that it is mandatory for all overseas Filipino workers (OFWs) to be covered by Philippine government imposed compulsory insurance. The insurance law, which has been enacted by the government of the Philippines, is causing controversy in Hong Kong where many thousands of Filipino domestic helpers are employed. The Philippines Overseas Employment Administration (POEA) released the news that implementation of the compulsory insurance scheme will start slightly earlier than initially planned, making it mandatory for all Filipino agency-hired workers to be covered by the Philippine insurance policy, with the cost of the scheme being borne by the recruitment agency or the foreign employer in the country of employment. The introduction of the Philippine compulsory insurance scheme is in accordance with the Philippine government Migrant Workers and Overseas Filipinos Act of 1995 - as amended in 2010 - which requires recruitment agencies to provide the stipulated insurance cover for all Filipino workers seeking employment overseas; the policy covers both land based and sea based employment. Penalty payments will be imposed for failure to comply with the requirements of the new guideline. Hong Kong - a special administrative region (SAR) of China - is one of the main destinations for Filipino domestic helpers. Imposition of the new requirement for mandatory insurance was met with large scale disapproval by employers in Hong Kong, with many seeing the compulsory Philippine insurance scheme unnecessary and counter-productive. Migrant workers from the Philippines working in Hong Kong are already protected under SAR law in respect of insurance cover. The insurance cover stipulated under Hong Kong SAR law costs around HK$ 900 (US$ 115) for a 2 year period - a cost met by the employer. Additionally, Hong Kong employers often obtain private comprehensive insurance for overseas workers covering medical expenses; annual premiums for this cover usually starts at HK$ 700 (US$ 90). The new Philippine law on compulsory insurance requires cover to include: HK$ 116,300 (US$15,000) for death in an accident, HK$ 77,540 (US$10,000) for natural death and HK$ 58,150 (US$7,500) in case of permanent disablement; cover also includes repatriation and medical evacuation. The policy cost is HK$1,123 (US$144) for 2 years of cover. It is estimated that nearly 130,000 Filipino domestic helpers working across Hong Kong will be affected by the new insurance law, which was enacted in Manila. The need for two forms of insurance protection for Filipino workers in Hong Kong is seen as unnecessary as the compulsory insurance required by SAR law provides an appropriate level of insurance cover for these migrant employees - with approximately 280,000 migrant workers already covered under the local insurance law. Strong calls have been made by interested parties in Hong Kong to get the government to repeal the Philippine compulsory insurance cover requirement for agency-hired OFWs. The view is that compliance with the new requirement could adversely impact on the hiring of Filipino domestic helpers. Also the new insurance scheme has been criticized for the lack of transparency as it is not completely clear if the foreign employer or hiring-agency needs to bear the compulsory insurance cost. The government of the Philippines amended the Migrant Workers and Overseas Filipinos Act of 1995 recently with the amendment being unclear and lacking clarity. Insufficient detail has also lead to the suspension of applications for Filipino workers by Hong Kong employers. In addition to the financial burden facing Hong Kong employers if they employ a Filipino worker, there is also the issue of the political fallout between Hong Kong and Manila over the bungled Manila hostage crisis and the tensions this is causing. The general view in Hong Kong is that the new Philippine government imposition of the compulsory insurance scheme for OFWs is needless as Filipino domestic workers are already amply protected through SAR's own laws and, even in many cases, by additional private insurance taken out voluntarily by Hong Kong employers. There is evidence that Hong Kong residents are canceling the hiring of domestic helpers from the Philippines in favor of workers from alternative sources. The implementation of the compulsory insurance coverage for agency-hired Filipino workers does not just affect those seeking employment in Hong Kong, it includes all countries seeking Filipinos workers hired through an agency in the Philippines. Since the 8th November 2010, all agency-hired overseas Filipino workers - either for land or sea based employment - are required to obtain compulsory insurance coverage issued by an accredited insurer through the Insurance Commission in the Philippines.
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