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Atty. Dennis B. Funa
Takaful insurance
THERE is, as of today, no regulatory framework for Takaful Insurance in the Philippines. Takaful has been defined as “a cooperative system of reimbursement or repayment in case of loss, paid to people and companies concerned about hazards, compensated out of a fund to which they agree to donate small regular contributions managed on their behalf by a Takaful operator.”
Insurance Core Principles
THERE are 26 Insurance Core Principles adopted by the International Association of Insurance Supervisors (IAIS). These principles are intended for all supervisors around the world, regardless of the level of development and sophistication of the insurance market. We present to you these principles, together with the guidance statements as prepared by the IAIS.
Capital regime for insurance companies in the PHL
UNDER Section 148 of Act 1459 (March 1, 1906), otherwise known as The Corporation Law, an insurance corporation must have a capital stock of “not less than P500,000” and “that 50 per centum of the whole stock has been actually subscribed, and that 50 per centum of the subscription has been actually paid in cash.” Thus, an insurance corporation must have at least P125,000 in paid-up capital (PUC). Section 148 further provides that the “whole subscribed capital stock of any fire and marine insurance corporation must be fully paid up in cash within one year after filing its articles of incorporation.”
24th method: Unearned premium reserve calculation
EVERY nonlife insurance company must set aside and maintain an amount corresponding to the legal reserves required under Section 219 of the Amended Insurance Code.
Doctrine of Condonation explained
EVERY now and then, we excuse ourselves from discussing insurance matters to tackle issues relating to national concerns. Besides, both subjects serve the interest of the public-at-large. Today, we tackle the Doctrine of Condonation in administrative law.
An overview on judicial bonds
ONE important advantage of suretyship is its universality, such that it finds application in almost all aspects of business and commercial transactions, including judicial proceedings. Bonds that are required in judicial proceedings, either civil or criminal, instituted in the Courts of Justice are called Judicial Bonds.
An introduction to suretyship
THE Insurance Code defines suretyship as “a contract whereby one party—the surety—agrees to guarantee the performance or nonperformance of an obligation imposed upon another party—the principal or the obligor—in favor of a third party—the obligee.” In the same vein, the New Civil Code identifies a contract as suretyship “if a person binds himself solidarily with the principal debtor.”
Is he, in fact, Petrus Romanus?
IN this season of Lent, we shall deviate from our regular production of insurance-related articles to tackle a more spiritual discourse, but not exactly spiritual. We give way to other human needs and to feed, as well, the necessities of our faith. I am referring to the papal predictions by Saint Malachy.
Life-insurance business in Japan
IN terms of life-insurance premium, Japan is the second-largest market in the world, second only to the United States.
Asean Insurance Council
ASEAN was originally formed in 1967 by the governments of the Philippines, Indonesia, Malaysia, Singapore and Thailand. In April 1978 the insurers of these countries met in Jakarta and decided to establish a council, which would be a non-governmental organization (NGO), where regional cooperation in the insurance industry can be attained.
Lloyd’s of London
LLOYD’S of London is an insurance market governed by various Acts of Parliament of the United Kingdom. Foremost of these acts are the Lloyd’s Act of 1871 and the Lloyd’s Act of 1982. It is not an insurance company, as in fact, it is not a company at all. As a market, underwriting is done by syndicates which are actually a pool of financiers composed of corporations and individuals. The individual members are known as “Names.” While the insurance business offered by Lloyd’s is very diverse, it is well-known for its reinsurance business. It is also well-known for taking up unusual risks, such as providing insurance cover for Celine Dion’s and Bruce Springsteen’s vocal cords and Tina Turner’s legs.
The Insurance Fund
SECTION 2 of Republic Act (RA) 275 (approved on June 15, 1948), generally known as the law that converted the Bureau of Banking into the Office of the Insurance Commissioner, authorized the Insurance Commissioner to assess the excess of expenses of the office over the fees collected “pro rata upon all domestic and foreign insurance companies operating in the Philippines in proportion to the gross premiums and other considerations written or received by them during the period for which the assessment is made on policies or contracts of insurance or reinsurance.”
Formalizing the informal insurers
ONE of the amendments introduced by the amended Insurance Code is the insertion of the word “cooperatives” in Section 190, which defines what juridical entities may become insurers. For the first time in Philippine insurance history, cooperatives were statutorily recognized as being legally capable of carrying out an insurance business. Thus, the birth of “cooperative insurance.”
International Association of Insurance Supervisors
TODAY we give recognition to the International Association of Insurance Supervisors (IAIS) for its pioneering and leadership role in the international insurance stage.
Basics of reinsurance
REINSURANCE is “a transaction whereby one insurance company (the ‘reinsurer’) agrees to indemnify another insurance company (the ‘reinsured’, ‘cedent’ or ‘primary’ company or ceding company) against all or part of the loss that the latter sustains under a policy or policies that it has issued.”
OFW compulsory insurance
REPUBLIC Act (RA) 8042, otherwise known as the “Migrant Workers and Overseas Filipinos Act of 1995”, provided for numerous welfare schemes for our overseas heroes, the overseas Filipino workers (OFWs).
Collateral source rule does not apply to contracts of indemnity
THE collateral source rule provides that “if an injured person receives compensation for his injuries from a source wholly independent of the tortfeasor, the payment should not be deducted from the damages which he would otherwise collect from the tortfeasor” (Black’s Law Dictionary, sixth edition).
Interest rate on refund of premiums
SECTIONS 80 to 83 of the Amended Insurance Code cover the rules on return of premiums. However, the law is silent with respect to the payment of interest, if any, on such amount. Therefore, we resort to the words of Philippine jurisprudence.
The development of insurance law in the Philippines
THE first insurance law in the country was incorporated in the Spanish Code of Commerce (Codigo de Comercio), or the Royal Decree of August 22, 1885 (Real Decreto de 22 de Agosto de 1885), which was then extended to the Philippines by the Royal Decree of 1888.
Insurers and skyscrapers
THE history of the evolution of insurance companies and the early construction of skyscrapers are somehow intertwined. In fact, American industrialist Henry Ford, in contemplating the high-rise buildings of New York City, once remarked: “This has only been made possible by the insurers. They are the ones who really built this city. With no insurance, there would be no skyscrapers. No investor would finance buildings that one cigarette butt could burn to the ground.”
An abridged history of life insurance
THE first life-insurance company in the world was the Amicable Society for a Perpetual Assurance Office. It was established in London, England, on July 25, 1706, by an act of Parliament, with the support of the Rev. William Talbot, then-bishop of Oxford, and Sir Thomas Allen, a financier. It initially had 2,000 members.
Passenger personal accident insurance for public-utility vehicles
AS public transportation in the Philippines continues to evolve, it has become very important for all public-utility vehicles (PUVs) to have sufficient insurance coverage for the protection of the riding public in the event of accidents, and for the alleviation of the difficulty encountered in paying hospitalization claims and death benefits to their passengers.
The agents of insurance companies
AN insurance agent is not an employee of an insurance company. While there may be some traits in the relationship between the agent and the insurance company that might appear to reflect an employer-employee relationship, the Supreme Court (SC) held in Tongko v The Manufacturers Life Insurance Co. (Phils.) Inc. (Manulife) (Resolution, GR 167622, January 25, 2011) that “there are built-in elements of control specific to an insurance agency [that] do not amount to the elements of control that characterize an employment relationship governed by the Labor Code.”
Mutual life insurers and premium tax
AN insurance cooperative is entitled to exemption from payment of taxes on life-insurance premiums and documentary stamps. To avail of these tax exemptions, registration with the Cooperative Development Authority is not required, for there is no such requirement under the Cooperative Code of the Philippines, the Tax Code and the Insurance Code.
The bank-secrecy law
THE Insurance Commission is one of three members of the Anti-Money Laundering Council (AMLC); the other two are the Bangko Sentral ng Pilipinas and the Securities and Exchange Commission. In a recent meeting with the Department of Finance, they raised a concern regarding the continuing need for bank-secrecy laws in the country. Let us, then, take a look at the current state of our bank-secrecy law.
The storm sewers of Saitama and Tokyo
ALTHOUGH it is unacceptable, whichever way we look at it, flooding in Metro Manila has become such a regular occurrence that even Metropolitan Manila Development Authority Chairman Francis N. Tolentino has conceded that the metropolis would never be able to avoid it.
Risk-based capital for insurers
WHAT is risk-based capital (RBC)? On its website, the United States’s National Association of Insurance Commissioners (NAIC) defines it as “a method of measuring the minimum amount of capital appropriate for a reporting entity to support its overall business operations in consideration of its size and risk profile.”