Licensing Requirements and Limitations
- No commission or compensation for insurance or reinsurance services shall be paid unless the person has a license issued by the Insurance Commissioner.
- No person may act as an insurance agent, variable contract agent, general agent, insurance broker or reinsurance broker without a proper license.
- Licenses issued to entities (partnerships, corporations, associations) authorize only named individuals to act; unauthorized use causes revocation or suspension.
- Agents or entities must secure or place outside business equal to business on their own lives or property to receive commissions.
- Restrictions exist on acting as agent for multiple companies or simultaneously as broker and agent in the same insurance type.
- Officials or employees of brokerage or adjustment companies and individual adjusters are prohibited from licensure as agents or general agents.
Qualifications for Licensing
- Applicant must be a Philippine resident, trustworthy, and pass a written examination unless exempt.
- For entities, they must be domiciled in the Philippines and empowered by articles of incorporation; named individuals must be qualified similarly.
Examination Requirements
- Written examination required unless exempted.
- Exemptions apply if previously licensed within 10 years, completed recognized courses, or found competent by the Insurance Commissioner.
- Examination fee is P20.00; a passing grade is 70%.
- Applicants must demonstrate good moral character and training in the relevant insurance field.
Application Procedures
- Applications must use prescribed forms and be accompanied by tax returns and proof of tax payments.
- Applications for general agents require copies of agency agreements and powers of attorney.
- Active engagement is demonstrated through certification of commissions earned (minimum P3600) by company officers.
- Alien applicants licensed before September 30, 1968, must submit proof of compliance with BOI reporting.
- Non-renewal due to inactivity may allow issuance of a special limited license to service existing policies for up to five years.
- Applicants not actively engaged must undergo training for at least 40 hours in the six months prior to reapplication.
Grounds for Denial, Suspension, and Revocation
- Violations of the Insurance Code or related regulations.
- False statements or fraud in applications.
- Fraudulent or dishonest practices, including misrepresentation of insurance terms.
- Misappropriation or illegal withholding of fiduciary funds.
- Failure to demonstrate trustworthiness and competence.
- Insolvency or bankruptcy.
- Failure to pass the examination when required.
- Lack of active engagement as defined (earning minimum commissions).
- Revocation can occur upon agency contract termination, with mandatory notice to the Insurance Commissioner.
Active Engagement Requirement
- Active engagement defined as earning at least P3600 in commissions or compensation within the license year.
- Applies to individuals named in licenses issued to entities as well.
Fees
- License fees range from P25 for agents and variable contract agents, P50 for general agents, to P200 for brokers and reinsurance brokers.
- Additional fees apply for multiple individuals named in entity licenses.
Effectivity
- This memorandum circular supersedes the prior Circular No. 2-81 dated December 17, 1981.
- Effectivity is immediate upon its date of issuances in 1986 and reissuance in 1991.