House Okays changes in Insurance Code

MANILA, Philippines - The House of Representatives has approved on second reading several amendments to the Insurance Code, which aim to further develop and strengthen the insurance industry.

The chamber passed a consolidated bill endorsed by the committee on banks and financial institutions, which Leyte Rep. Sergio Apostol chairs.

The bill is a fusion of four similar measures authored by Representatives Hermilando Mandanas of Batangas, Juan Edgardo Angara of Aurora, Teodorico Haresco of the party-list group Ang Kasangga, and Joseph Victor Ejercito of San Juan.

The consolidated version, Bill 4867, 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 his/her/its borrowers, depositors, clients, or third parties.”

It 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 measure allows payment of insurance premiums and loan obligations by government employees through salary deduction.

It also provides for regulations on micro insurance, which the bill defines as “any activity providing specific insurance that meets the needs of the low-income sector for risk protection and relief against distress, misfortune and other contingent events.”

It requires a domestic insurance company to have a paid-up capital by Dec. 31, 2012 of P175 million if it has less than 40-percent foreign equity, P350 million if its foreign equity is 40-percent to 59-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 that 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.