DID you know that the country now has only one operational steel factory?
That’s the Batangas-based Steel Corp. of the Philippines (SCP), and it is now in danger of going belly up if its insurance claims worth over P1 billion against nine insurance firms isn’t settled soon.
The steel factory has sought the intercession of the Court of Appeals after its formal complaint against the nine firms filed with the Insurance Commission (IC) for over a year now has yet to be decided upon.
Here’s what I gathered from the facts of the case.
SCP’s steel mill in Balayan, Batangas, was hit by fire twice, one in 2008 and the other in 2009.
On July 25, 2007, SCP insured its assets, including plant, buildings and equipment, for material damage and business interruption losses with the following insurance companies: UCPB General Insurance Corp., 40 percent; Oriental Assurance Corp., 40 percent; PNB General Insurers Co. Inc., 15 percent, and Equitable Insurers Co. Inc., 5 percent.
In the aftermath of the 2008 fire, SCP filed claims with the four insurance firms, but they refused to pay based on the insurance plan bought by the steel company.
After SCP’s sad experience with the first group of insurers, SCP decided to insure its assets with another consortium of insurers, namely, Philippine Charter Insurance Corp., 39.5 percent; Mapfre Insular Insurance Corp., 26 percent; New India Assurance Co. Ltd., 4 percent; Standard Insurance Co. Inc., 12 percent; and Asia Insurance Phils. Corp., 8.50 percent.
But another fire occurred on December 7, 2009. Notwithstanding the fact that the steel company met all the requirements of the insurance firms, it said, “the insurers failed and refused to pay its claim for the material damage and business interruption losses sustained by SCP.”
The SCP, thus, filed two separate cases with the IC. The first was docketed as IC Case NRD-420 for the first batch of insurers and the other case was docketed as IC Case RD-515 for the second group of insurers.
The IC is empowered under the law to “adjudicate claims and complaints involving any loss, damage or liability for which an insurer may be answerable under any kind of policy or contract of insurance, or for which such insurer may be liable.” Thus, SCP immediately sought the IC’s intervention because of the latter’s supervisory power over insurance companies.
Under Section 439 of the Insurance Code, the Insurance Commissioner shall have the power to adjudicate claims and complaints filed by the insured against the insurance company.
Since the primary mandate of the IC is to conduct investigations, inquiries and hearings in order to determine an offense or violation by any parties to an insurance contract, SCP filed the case with the IC to seek redress for the nonpayment of the insurance companies of the insurance proceeds worth more than P1 billion.
The SCP thought that the cases they filed against the insurers would be brief since the Rules of Procedures specifically provides that all cases filed with the IC would be resolved within 30 days from the time all documents required by the rules had been filed by the parties.
According to Section 1 of Rule 6, “Unless a different period be fixed by special law, all contested cases or incidents shall be decided within 30 days from the date of submission for resolution.” But, despite this rule requiring cases to be resolved 30 days after the submission for resolution, the SCP case versus the insurers has yet to be decided upon by the IC.
The country’s only remaining operational steel maker is now on the brink of bankruptcy because its insurance claims have yet to be resolved.
Now that the case has been elevated to the Court of Appeals, will the judicial process favor the SCP?
Meantime, what can the Insurance Commission say on this issue? It would be interesting to hear their side of the story.
E-mail: ernhil@yahoo.com.