Govt cautioned on compulsory insurance coverage

MANILA, Philippines—Overseas Filipino workers’ groups and recruitment agencies have reiterated their concern over the looming enforcement of compulsory insurance coverage for all deployed OFWs, as provided by the amended Migrant Workers Act.

Migrante-Middle East, an OFW group, wrote Labor Secretary Rosalinda Baldoz on October 24 asking the government to make sure that recruitment and manning agencies would not pass on to OFWs the cost of the insurance premium which, under new law, should be borne by the recruiters.

Recruitment industry groups are reportedly lobbying for reconsideration on the compulsory insurance policy from the Philippine Overseas Employment Agency, which is expected to have promulgated implementing rules on the provision by next week.

However, two recruitment industry consultants said recruiters could easily circumvent the requirement and indirectly collect the insurance costs by jacking up placement and service fees collected on the recruits.

“In Asia, the insurance cost can be indirectly collected by local recruiters from the overseas brokers, who would then increase the service fees that the recruits will have to pay. In the Middle East, the recruiters and brokers can demand bigger salary deductions from the recruit. This is the reality,” consultant Emmanuel Geslani said in a phone interview.

Geslani, a recruitment industry leader and practitioner for three decades, said the government might also end up using taxpayers’ money to pay for the insurance of OFWs deployed through government-to-government deals, such as those being sent to South Korea.

“The government has to realize that the present situation [of OFWs being made to pay for all deployment costs] will continue since in 95 percent of all Asian destinations, employers and local brokers are not covered by state regulations,” added Lito Soriano, another consultant and a former OFW himself.

Soriano and Geslani also questioned if insurance companies would take a big risk in covering big numbers of OFWs who have been deployed to countries embroiled in conflict.

Insurance firms would have to pay for all OFWs who get killed or injured, or evacuated, the number of which could reach into thousands as what happened in Kuwait during the first Gulf War and in Lebanon during the Israeli-Hezbollah confrontation.

However, Migrante-Mideast regional coordinator John Leonard Monterona said posing such a scenario was a “silly excuse.”

“In war-torn countries like Iraq and Afghanistan, and in places where there is a high incidence of abuses like Jordan and Lebanon, there are existing deployment bans. If I were a recruiter, I would not send or deploy OFWs in countries where the risk is very high,” he said in reply to query from the Philippine Daily Inquirer sent through email.

The Saudi Arabia-based OFW said the labor department and the POEA should qualify the insurers to be hired by the recruiters “to prevent conflict of interest and possible collaboration between them in circumventing the insurance provision.”

Soriano said forcing recruiters to pay for the insurance would affect their viability.

“The agencies that don’t pass on the insurance cost to either OFWs or employers are at risk of collapsing. The Insurance Commission’s prescribed premium will wipe out their profit margin,” he said.

He explained that overseas employment agencies and brokers get the lion’s share of the deployment profits.

“If a Philippine recruiter—which is already collecting the legal one-month’s salary placement fee at the average of $450 and remitting fees to foreign brokers for recruitment processing and overhead costs of $300 plus—is made to pay the additional $150-$200 insurance, its business is over, closed,” Soriano said.

Monterona said he would also like to know what would happen to the Overseas Workers Welfare Administration, which has been providing for life insurance, death benefits, and other services if the private insurers took over.

As OWWA “has not been very useful and helpful to distressed OFWs,” the OFWs should no longer be required to pay the $25 compulsory contribution, Monterona said.

This might mean, however, that OWWA would have to be phased out since it would no longer have a fund source. He said Migrante would be asking the labor department to clarify the situation of the OWWA, which is currently holding in trust funds estimated at P12 billion.

The recruiters are also facing a loss of market as the Department of Foreign Affairs is expected to come out next week with a list of destination countries where migrant workers rights are guaranteed and where OFW deployment may be permitted.

Geslani and Soriano said nearly all the top 10 destinations of OFWs, mostly Middle Eastern countries, lack or have inadequate local laws protecting migrant workers.

“There are more than a dozen relevant questions that, OFWs and recruitment agencies feel, need attention by the government and the congressional oversight committee. I hope all matters can be resolved as I fear that some elements of the recruitment industry may consider challenging the new law as it will put in question the survival of the private overseas employment program,” he said. –Jerome Aning, Philippine Daily Inquirer