Senate okays bill amending Insurance Code

MANILA, Philippines - The Senate has approved on third and final reading last Monday, a bill amending the 38-year old Insurance Code of the Philippines to regulate and supervise the country’s insurance industry.

Sen. Serge Osmeña, chairman of the Senate Committee on Banks, Financial Institutions and Currencies, stressed the need to introduce amendments to the Insurance Code to make it “relevant to the changes that have transpired in the industry but also, in anticipation of future transformation that it is bound to undergo considering the growing sophistication of industries across the globe.”

Osmeña is the sponsor of Senate Bill 3280 that pushed for the amendments of the antiquated law.

“Amendments will have to be flexibly constructed to enable at pace alignment with the continuously evolving financial markets, maturing compliance standards and practices, strengthening government processes and developing insurance accounting standards,” Osmeña said.

Regulatory amendments include the recognition of processes that use advancements in technology, provision for fair protection to insurers from fraud and discriminatory mechanisms, redefinition of solvency regime to conform with internationally-accepted standards, institution of changes in company and agent licensing process, grant of a fixed six-year term and strengthening the powers of the insurance commissioner and addition of new titles and related provisions on micro-insurance and bank assurance.

Once the bill is passed into law, would-be policy holders like government employees may acquire insurance by payment of premiums through salary deductions.

Another amendment is the increased amount of exemption from court authority or judicial bond requirements in the parent’s exercise of minor’s rights under the policy and the adjudication of contested claims cases at the insurance commission level.

Investment instruments that were not in existence in the Insurance Code have also been included in the list of admissible assets under the proposed legislation that would have a “positive impact in the network of insurers.”

Moreover, a financial reporting framework which adopts internationally-accepted accounting standards in the reporting of the financial condition of insurers had been added as accounting-related amendment.

“This would close the gap in the valuation of admitted assets, reserves and investments between the statutory accounting standards under the annual statement required by the Insurance Commission against the externally audited financial statement,” Osmeña said.