SECTION 190 of the Amended Insurance Code recognizes that “cooperatives” may become insurers. Thus, the terms “cooperative insurance” or “insurance cooperatives.” This is to supplement Republic Act (RA) 9250, otherwise known as the Philippine Cooperative Code of 2008, which expressly recognizes that a cooperative may be organized to engage in insurance business (Article 6 [9]). Under the Cooperative Code, it shall be classified as a service cooperative (Article 23 [e]). If it is engaged only in insurance activities for its members (Article 6 [7]), it shall be known as an insurance cooperative which is “engaged in the business of insuring life and property of cooperatives and their members” (Article 23 [9]). The recognition of cooperatives to engage in the insurance business came as early as 1973 when Presidential Decree 317 amended Act 2427, otherwise known as the Insurance Act, and which gave cooperatives the mandate to engage in insurance business.
There are, as of 2015, only two licensed cooperative insurance companies in the Philippines. They are: the CLIMBS Life and General Insurance Cooperative and the Cooperative Insurance System of the Philippines.
CLIMBS Life & General Insurance Cooperative
Coop Life Insurance & Mutual Benefit Services (CLIMBS) Life & General Insurance Cooperative is a composite insurance cooperative established in 1971. It provides life insurance, property insurance and health-care products. CLIMBS is owned by more than 1,000 cooperatives and cooperative federations, comprising more than 1 million members.
Thus, it is also known as a “parent cooperative.” It started in Mindanao area where today it holds its main office in Cagayan de Oro. It was initiated by the Misamis-Oriental-Bukidnon-Camiguin Federation of Cooperatives and the Southern Philippines Education Cooperative Center in order to give affordable insurance protection to cooperative members who are mostly laborers, fishermen, farmers and other low-income workers. It pioneered in what is to be known as “grassroots insurance.”
It was not until a few years later, however, that CLIMBS was incorporated as a nonstock and nonprofit corporation with the Securities and Exchange Commission on November 20, 1975. It was only on December 17, 1992, when CLIMBS was registered with the Cooperative Development Authority (CDA) pursuant to RA 6838, otherwise known as the Cooperative Code of the Philippines. It was registered again on March 17, 2004, under the amendatory charter of the CDA. It transacts business only with its members.
On April 20, 1994, it was granted a license as a mutual benefit association (MBA) by the Insurance Commission (IC). On June 1, 2007, CLIMBS, being an MBA, merged with the Cooperative Life Assurance Society of the Philippines, an insurance company, to form a new insurance company. It was the first-of-its-kind merger.
On April 21, 2010, CLIMBS was granted a license as a composite insurance company. It started its actual nonlife operation only in August 2010 with four products: motor car, fire, money security and payroll insurance and fidelity bonds.
Indeed, its distinct advantage is the capacity to offer tax-exempt insurance products.
This tax exemption and other tax incentives is pursuant to RA 9520 which provides the following exemptions: 1) income tax on income from CDA-registered operations; 2) value-added tax on CDA-registered sales or transactions; 3) 3-percent percentage tax under Section 116 of the Tax Code of 1997; 4) donor’s tax; 5) excise tax; 6) documentary stamp tax; 7) annual registration fee of P500; 8) exemption from all taxes on transactions with insurance companies and banks, including but not limited to 20-percent final tax on interest deposits and 7.5-percent final income tax on interest income derived from a depository bank under the expanded foreign currency-deposit system.
CLIMBS is registered with the CDA. It is a member of the International Cooperative & Mutual Federation (icmf), Asia Oceania Association of ICMF, Philippine Life Insurance Association, the Philippine Cooperative Center, and the National Confederation of Cooperatives. It has one subsidiary (subsidiary cooperative), its marketing arm, the Coop Life General Insurance and Financial Services Agency (Clifsa), which is a general agent for nonlife insurance. Clifsa was first registered with the IC on July 1, 2010. It should also be noted for its Institute of Financial Literacy, which conducts training sessions for its cooperative members.
It is noted that after the devastation of Supertyphoon Yolanda, it paid a total of P129 million in nonlife claims and P2 million in life claims.
As a life-insurance company, it offers the following products: 1) Co-op Life Savings Plan; 2) Co-op Loan Protection Plan; 3) Group Renewable Term Life; 4) Group Family Plan; 5) Group Accident, Death, Dismemberment, Disablement Insurance; 6) Group Life and Accident with Fire Insurance; 7) Group Accidental Death, Disablement and Dismemberment Indemnity, and Funeral Service Assistance; 8) Member Year Renewable Accident and Life; and 9) Permanent Plan.
As of the end of 2014, it has a total assets of P1.437.9 billion, a net worth of P658.2 million, and a net income of P153.6 million. Total life premiums amounted to P56.27 million, and total nonlife premiums amounted to P117.41 million representing 22,559 policies.
Cooperative Insurance System of the Philippines
The Cooperative Insurance System of the Philippines (CISP) was established on January 25, 1974, with 69 cooperative organizations representing about 400,000 individuals. Today, it has more than 2,000 cooperative members representing over 700,000 individual members. As of the end of 2014, its total assets amounted to P400.8 million, its networth stood at P250 million and with a net income of P62 million.
Facing capital deficiency problems, the First Community Cooperative (Ficco) infused P83 million into CISP on July 2013. By 2014 CISP reported a net income of P62 million and declared a 13-percent dividend. Ficco is currently the third-biggest stockholder of CLIMBS and is the largest owner of CISP. Ficco also operates the Ficco MBA with assets of P390 million as of end of 2014. Ficco was originally known as the Ateneo Credit Union having been established by the teaching and nonteaching staff of Ateneo de Cagayan, also known as Xavier University.
1 comment
Very informative and well-written! Is CLIFSA or CLIMBS the health insurance provider for Cebu CFI Cooperative? Cfi imposes a mandatory requirement for members to buy health insurance