Question & AnswerQ&A (Republic Act No. 10607)
The Insurance Code refers to Presidential Decree No. 612, as amended, which governs the insurance industry in the Philippines, further amended by Republic Act No. 10607 to strengthen insurance regulation and supervision.
No corporation, partnership, or association shall transact any insurance business in the Philippines unless authorized by a certificate of authority from the Insurance Commissioner, and they must meet capital and legal requirements.
It includes making or proposing to make any insurance or suretyship contracts as a vocation, engaging in recognized insurance business activities like reinsurance, or any business designed to evade the provisions of the Code.
A policy must specify the parties to the contract, amount insured, premium, property or life insured, insured's interest if not absolute owner, risks insured against, and the insurance period.
A new domestic life or non-life insurance company must have a paid-up capital of at least One billion pesos (P1,000,000,000.00).
Any person presenting fraudulent claims or documents shall be punished by a fine not exceeding twice the amount claimed, imprisonment of up to two years, or both, at the court's discretion.
The Insurance Commissioner enforces insurance laws, supervises insurance entities, issues regulations, approves licenses, investigates violations, adjudicates claims up to P5 million, and may impose sanctions for violations.
They must obtain a license from the Insurance Commissioner, pass written examinations unless exempted, file a bond (for brokers), and demonstrate good moral character, competence, and compliance with the Code.
Microinsurance must have premiums not exceeding 7.5% of the daily minimum wage and maximum benefits not more than 1,000 times the daily minimum wage; only companies meeting requirements prescribed by the Commissioner may engage.
A contract where a surety guarantees the performance by a principal of an obligation to an obligee, with joint and several liability limited to the bond amount.
Land transportation operators and motor vehicle owners must have insurance or surety bond covering death, bodily injury, and property damage to third parties and passengers as per prescribed minimum amounts, or make a cash deposit for indemnity.
Violation of the Code, material misstatements, fraud, dishonest practices, misappropriation of funds, incompetence, misrepresentation of policies, or failure to pass examination.
The Commissioner may examine books and records, issue subpoenas, conduct hearings, suspend or revoke licenses, and appoint conservators or receivers for insolvent companies.
The Security Fund is established to pay allowed claims of insolvent insurance companies not paid, financed by contributions from authorized insurance companies, and administered separately for life and non-life accounts.
Insurers found insolvent must cease business; a receiver and then a liquidator may be appointed; assets are collected and disposed of for policyholders' and creditors' benefit; the Commissioner’s actions are final and exhaust administrative remedies.