OCT.

29, 2011 DATE

NR # 2571
REF. NO.

House approves further amendments to the Insurance Code

The House of Representatives has approved on second reading a proposal to further amend Presidential Decree 612, otherwise known as the Insurance Code, to strengthen the insurance industry by accelerating its growth and development, and ensure consumers fair and equitable treatment. The approved measure, House Bill 4867, substituted House Bill HB 3797 authored by Rep. Hermilando Mandanas (2nd District, Batangas), HB 1502 by Rep. Juan Edgardo Sonny Angara (Lone District, Aurora), HB 2672 by Rep. Teodorico Haresco, Jr. (Partylist, Ang Kasangga), and HB 2988 authored by Rep. Joseph Victor JV Ejercito (Lone District, San Juan). The bills plenary approval was endorsed by the House Committee on Banks and Financial Intermediaries chaired by Rep. Sergio Apostol (2nd District, Leyte). The bill expands the definition of doing an insurance business to include the practice of self-insurance by any person or entity extending life insurance or similar protection to its borrowers, depositors, clients or third parties. The bill deems irrevocable the designation of a beneficiary in the event the insured does not change the beneficiary during his lifetime. The bill provides that the interest of a beneficiary in a life insurance policy shall be forfeited when the beneficiary is the principal, accomplice, or accessory in willfully bringing about the death of the insured. In such case, the share forfeited shall pass on to other beneficiaries, unless otherwise disqualified. In the absence of other beneficiaries, the proceeds shall be paid in accordance with the policy contract, and if the policy contract is silent, the proceeds shall be paid to the estate of the insured. The bill allows payment of insurance premiums and loan obligations by government employees through salary deduction. The measure also provides for regulations on microinsurance, which under the bill is defined as any activity providing specific insurance that meets the needs of the lowincome sector for risk protection and relief against distress, misfortune and other contingent events. The proposal also increases the minimum paid-up capital stock requirements for insurance companies. It provides that no new domestic life or non-life insurance company shall, in a stock corporation, engage in business in the Philippine unless possessed of a paid-up capital stock equal to at least P500 million.

OCT. 29, 2011 DATE

NR # 2571
REF. NO.

It further provides that a domestic insurance company already doing business in the Philippines shall have a paid-up capital by December 31, 2012, of P175 million for an insurance company with less than 40 percent foreign equity, of P350 million for an insurance company with 40 percent but less than 60 percent foreign equity, and P500 million for an insurance company with at least 60 percent foreign equity. The measure adds new forms of admitted assets such as mutual funds, real estate investment trusts, salary loans, unit investment trust funds and special deposit accounts and other assets which are deemed by the Insurance Commissioner to be readily realizable and available for the payment of losses and claims at values to be determined by him. It also grants the Insurance Commissioner the authority to register self-regulatory organizations whose operations are related to or connected to insurance. Other salient features of the bill: it adopts international standards on solvency requirement; it adds a new title on Bancassurance which the bill defines as the presentation and sale to bank customers by an insurance company of its insurance products within or outside the premises of the head office of such bank duly licensed by the Bangko Sentral ng Pilipinas or any of its branches under such rules and regulations which the Commissioner may promulgate; and it authorizes insurance companies to engage in trust business operations. (30) rbb