Question & AnswerQ&A (CIRCULAR LETTER NO. 2018-47)
The basis for computing the annual rate of premium charged on bonds is the percentage (%) rates per annum indicated in Schedule I of the Rules and Regulations.
No, the annual premium on bonds running for less than one year shall not be pro-rated but shall be charged in full at the applicable rate per annum, except for promissory notes.
If bonds are extended by endorsement for the remaining period of the year, additional premium shall no longer be charged unless the extension is due to change orders or additional works for which additional consideration is paid, in which case additional pro-rated premiums shall be charged.
For bond renewals or extensions running for more than one year, the premium shall be pro-rated for the entire extended duration computed at the applicable rate per annum.
The minimum premium rate chargeable on any one bond is P500.00 regardless of other computations.
When there is a combination of two or three types of bonds issued as one single bond, the highest applicable premium rate shall apply.
A 50% reduction of the annual premium is allowed for bonds fully secured by assignments of bank deposits, Philippine government bonds or similar government-guaranteed securities, other allowable securities as per the Insurance Code, or real estate. The bond must be marked as 'FULLY SECURED'.
The company must submit a sworn statement by its President or Vice-President and Treasurer explaining the loss circumstances and stating the lost form was never issued to anyone.
Every company must maintain a bond registry book open to the public and Insurance Commission representatives, recording details such as serial numbers, issue date and place, bond amount, kind, obligations secured, obligee, and status (outstanding or cancelled). A liability register and subsidiary liability registers must also be maintained.
Violations may result in suspension or revocation of the insurance company's license, payment of penalties, or both.
The new prescribed Performance Bond form must be used, the premium rate applied shall be for Performance Bonds, and an additional one-year premium applies for the defects liability period regardless of project completion time.
The insurance company must immediately surrender its bond registry book and all unused bond forms to the Insurance Commissioner or authorized representatives.