Licensing Rules for Insurance Agents Circular

Purpose, policy, and controlling authority

The circular establishes licensing rules that regulate who may act as an insurance agent or general agent in the Philippines.
The circular requires pre-licensing control through the Insurance Commissioner for insurance agency and general agency activities.
The circular amends Insurance Memorandum Circular No. 2-86 dated September 29, 1986.

Governing definitions

The term “person” includes any individual, partnership, associations, or corporation, unless the context requires otherwise.
The term “insurance agent” means any person who, for compensation, solicits or obtains insurance on behalf of an insurance company, or transmits an application for a policy or contract of insurance to or from such company for a person other than himself, or offers or assumes to act in the negotiation of such insurance.
The term “general agent” means an insurance agent who is empowered by the insurance company to do additional acts and things for and on behalf of the company as specified in a general agency agreement executed between them.

Who must be licensed; coverage limits

No insurance company doing business in the Philippines, or any agent thereof, shall pay any commission or compensation for services in obtaining insurance unless the recipient has first procured a license from the Insurance Commissioner.
No person shall act as an insurance agent or general agent in the Philippines without a license from the Insurance Commissioner.
A license issued to a partnership, association, or corporation authorizes only the individuals named in the license; any exercise or attempted exercise by an unlisted individual, with the knowledge or consent of the licensee, constitutes cause for revocation or suspension.
A licensed agent or general agent must maintain a minimum level of “outside business” during the period covered by the license, subject to the specific equal-amount rule.
Licensing capacity is capped by company-type and numerosity limits: an agent may not represent more than the allowed number of companies, with additional restrictions on transitions between insurance agent and insurance broker status.
Certain categories are barred from licensing, including employees tied to brokerage/adjustment functions and higher-ranking company employees.
General agent licensing is restricted by an experience prerequisite requiring prior “ordinary agent” licensing and active engagement for at least one year.

License issuance, validity, renewal, and fees

Licenses are issued only if the applicant makes a written application and pays the corresponding fee, and is found qualified and not otherwise disqualified.
A license is valid until midnight of the 30th day of June of the year following its issuance unless sooner revoked or suspended for cause.
Licenses may be renewed annually on January 1, or within six (6) months thereafter.
Renewal requires the application to be filed on forms prescribed by the Insurance Commissioner, with supporting documents stated in the circular.
For issuance or renewal, the license fees are:
- PHP 100.00 for each license issued to an insurance agent.
- PHP 200.00 for each license issued to a general agent.
If the licensee is a partnership, association, or corporation, the licensee pays a full additional license fee for each prospective individual named in excess of one.

Qualifications, examination, and exemptions

To qualify, an applicant must be a resident of the Philippines, be trustworthy, and pass the written examination for the kind of license applied for, unless exempt.
If the applicant is a partnership, association, or corporation, it must be domiciled in the Philippines and empowered under its articles of incorporation to transact the kind of business applied for; the individual to be named in the license must also meet the qualifications.
The examination is held at times and places designated by the Insurance Commissioner.
Applicants file an application for the examination with the Insurance Commission using forms prescribed by the Insurance Commissioner.
Examination fees are:
- PHP 100.00 for walk-in examination.
- PHP 150.00 for provincial examination.
An applicant for examination must be of good moral character, must not have been convicted of any crime involving moral turpitude, and must satisfactorily show training in the kind or kinds of insurance contemplated in the license applied for.
A grade of 70% is required to pass the examination.
No examination is required for:
- A person who presently holds, or previously held at any time during the last ten (10) years, a license of the kind applied for.
- A person who has successfully completed the Insurance Agents' Course conducted by the Insurance Institute for Asia and the Pacific, or an academic course and/or training program satisfactory to the Insurance Commissioner, in the kind of insurance contemplated in the license applied for.
- A person found by the Insurance Commissioner to be competent to transact the business contemplated, because of previous connections with an insurance company, or with an office or firm handling insurance matters.

Application requirements for agent and general agent licenses

Applications for issuance or renewal must be made on forms prescribed by the Insurance Commissioner.
For a partnership, association, or corporation, the application must designate the individual who will exercise the power granted by the license.
A renewal or issuance application must be accompanied by:
- a copy of the applicant’s income tax return for the preceding year, and
- a copy of the applicant’s privilege tax receipt for the current year (for renewal).
An application for issuance of an insurance agent license must additionally include a copy of the agency agreement between the applicant and the insurance company, limiting the agent’s power to solicitation of insurance business only.
An application for issuance of a general agent license must additionally include:
- a copy of the general agency agreement between the applicant and the insurance company, and
- a copy of the power of attorney duly executed by the insurance company empowering the applicant to receive notices, summons, and legal processes for and in behalf of the company in actions or legal proceedings against it.
For purposes of processing renewal—particularly “actively engaged” compliance—certification may substitute for actual verification of income details when the required condition is met:
- certification under oath by specified corporate officers of the insurance company that the applicant’s commission/compensation for services as agent amounted to at least three thousand six hundred pesos based on examination of the applicant’s income tax return for the preceding year.
The certification must be accompanied by a jointly signed statement of waiver by the insurance company and the insurance agent, stating that if the certification is found false in any respect, the renewed license is immediately cancelled without prior notice, and the parties will be dealt with as required.
An alien applicant for renewal who has been licensed by the Commission before September 30, 1968 and has been continuously licensed must submit proof that the applicant submitted the report prescribed in Section 2, Rule IV of the implementing rules of Republic Act No. 5455 to the Board of Investments.

Active engagement standard and outside business

A license may be refused, suspended, or revoked if the holder fails to satisfy qualification and conduct requirements; license renewal also depends on active engagement.
The “actively engaged” requirement is defined as earning during the year following issuance commissions or other compensation for services rendered amounting to at least three thousand six hundred pesos.
For a partnership, association, or corporation, the “actively engaged” requirement applies to the individual named in the license.
An insurance company shall not pay and a licensed agent shall not receive commission or other compensation for insurance on life or property (or other interests) unless the agent has secured or placed with the company at least an equal amount of outside business during the period covered by the license.
The outside-business equal-amount rule applies also when the license holder is a partnership, association, or corporation and the procurement involves insurance on the lives or property, or interests, of the partnership, association, or corporation, or any of its partners, members, or stockholders.
An insurance agent or general agent who failed to qualify for renewal because of not being actively engaged may apply for a new license after one year from expiration if the applicant shows training in the kind(s) of business contemplated in the license, for at least forty (40) hours during the last six (6) months prior to application.

Denial, suspension, revocation, and renewal bars

The Insurance Commissioner may refuse an application for issuance or renewal, and may suspend or revoke an already issued or renewed license, when the applicant or holder:
- willfully violated any provision of the Insurance Code, the circular, or any rules, regulations, or instructions of the Insurance Commissioner; or
- intentionally made a material misstatement in the application to qualify; or
- obtained or attempted to obtain a license by fraud or misrepresentation; or
- is guilty of fraud or dishonest practices; or
- misappropriated or converted to the holder’s own use, or illegally withheld money required to be held in a fiduciary capacity; or
- failed to demonstrate trustworthiness and competence to safeguard the public; or
- materially misrepresented terms and conditions of policies or contracts sold or sought to be sold; or
- failed to pass the required written examination, if not exempt; or
- was declared insolvent or bankrupt.
A license shall not be renewed if the holder has not been actively engaged as an insurance agent or general agent.
Except for the special case for life business servicing, an application for issuance of a license is refused where a previous holder’s license of the kind applied for expired without renewal during the current year and the applicant was not actively engaged during the effectivity of the last license.
A license may be revoked upon termination of the agency contract, and the insurance company must give immediate written notice to the Insurance Commissioner.

Special license for existing policy servicing

If an insurance agent or general agent’s license for life business is denied renewal because the agent was not actively engaged as required, the agent may be issued a special license to service existing policies that were solicited by the agent and to receive renewal commissions therefor.
The special license requires submission of a sworn certification executed by a responsible officer of the concerned insurance company that the agent has to the agent’s credit business to which the agent is entitled to renewal commissions.
Under the special license, the agent is prohibited from soliciting new business.
The special license cannot be renewed annually for more than five (5) years.

Prohibited licensing, employment restrictions, and limits

No insurance company or agent may pay commissions or compensation to a person for obtaining insurance unless the person has first procured the required license.
No person may act as an insurance agent or general agent without first procuring the required license.
A person cannot be licensed as an insurance agent or general agent for more than one life insurance company, and cannot be licensed as a general agent for more than one non-life insurance company and as an insurance agent for more than seven (7) other non-life insurance companies.
A person licensed as an insurance agent or general agent cannot be licensed as an insurance broker.
A person licensed as an insurance broker cannot be licensed as an insurance agent or general agent in the same kind of insurance business.
The same limitation applies to the individual named in the license issued to a partnership, association, or corporation.
No person may be licensed as a general agent unless that person has been licensed as an ordinary agent and actively engaged as such for at least one year.
No official or employee of an insurance brokerage or an adjustment company, and no individual adjuster, may be licensed to act as an insurance agent or general agent.
No employee with the rank of manager and above in an insurance company may be licensed to act as an insurance agent or general agent.