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BusinessMirror The development of insurance law in the Philippines

http://www.businessmirror.com.ph/the-development-of-insurance-law-in-the-philippines/

The development of insurance law in the Philippines Category: Opinion 23 Dec 2014 Written by Dennis B. Funa

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.

The provisions in the Spanish Code of Commerce concerning insurance can be found

in Title VIII (On insurance contracts) (repealed by the Spanish Act 50/1980, dated October 8) of Book II and Section III (On maritime insurance) of Title III (On special maritime commerce contracts) of Book III. However, all these provisions pertained solely to maritime insurance. In addition, while Chapters II and IV of Title XII of Book IV of the Spanish Civil Code of 1889 related to life annuities, they did not relate directly to insurance.

During the Philippine Commonwealth period, the legislature enacted Act 1459, or the Corporation law, on March 1, 1906. Sections 147 to 153 thereof pertained to Domestic insurance corporations. This law allowed the creation of life and nonlife insurance companies. These provisions were expressly repealed by Act 2427, or the Insurance Act, on December 11, 1914. This act took effect on July 1, 1915, and also repealed the provisions of the Spanish Code of Commerce on insurance.

Under the Insurance Act, the insular treasurer, in addition to his official title, was designated as the insurance commissioner ex-officio. This made then-Insular Treasurer Jeremiah L. Manning the first insurance commissioner, albeit in an ex-officio capacity, until he retired on June 11, 1916. The government agency that supervised insurance business in the country was the Insurance Division of the Bureau of the Treasury (BTr). By 1918 60 insurance companies were doing business in the Philippines. Of this number, nine were local companies, 12 were American and the rest were from other nations, mainly the United Kingdom. Most of the coverages were fire, marine and life. Typhoon and earthquake coverage were provided by the British Traders Insurance Co. and the Union Insurance Co.



of Canton, both based in Hong Kong. The only Philippine company offering these coverages was the Fidelity and Surety Co. of the Philippines. On March 10, 1917 Act 2711 (Chapter 15) amended the Administrative Code to provide for the provisions on Public Bonding law.

In 1939 the Union Insurance Society of Canton appointed Russel & Surgis as its agent in Manila, transacting business limited to nonlife insurance.

During the Second World War, the Insurance Division was separated from the BTr and attached to the Bureau of Banking. After the war, the division was returned to the treasury bureau. In 1947 the Insurance Division was merged with the banking bureau.

On January 3, 1949, along with the formal opening of the Central Bank of the Philippines, the banking bureau was renamed as the Office of the Insurance Commissioner, by virtue of Republic Act (RA) 275. Likewise, the bank commissioner and assistant bank commissioner were renamed as insurance commissioner and assistant insurance commissioner, respectively.

On December 18, 1974, Presidential Decree (PD) 612 was promulgated, ordaining and instituting the Insurance Code of the Philippines, thereby repealing Act 2427. PD 63, 123 and 317 were issued, amending PD 612. Among other things, PD 63 provided that the Office of the Insurance Commissioner be renamed as the Insurance Commission (IC). Finally, on June 11, 1976, PD 1460 took effect and consolidated all insurance laws into a single code, resulting in what we know now as the Insurance Code of 1978.

Due to the series of failures in the preneed industry, there was a need to provide a stricter regulatory framework. On July 27, 2009, RA 9829, or the Preneed Code of the Philippines, was enacted. By virtue of this code, the regulation and supervision of all preneed companies conducting business in the country was vested in the IC.

On August 15, 2013, RA 10607, or the Amended Insurance Code, was signed by President Aquino. One of the amendments included in this law is the progressive increase of capital requirements for life and nonlife insurance companies every three years until 2022.

The revisions embodied in the Amended Insurance Code are intended to reinforce the provisions of the previous code, so as to further strengthen the insurance industry and ensure the economic viability and financial stability of companies operating in the country, to the end that each and every Filipino is amply protected and secured.



Dennis B. Funa is the Insurance Commissions deputy commissioner for legal services. Send comments to [email protected].

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