Brief Overview
The primary law governing insurance in the Philippines is Presidential Decree No. 612, also
known as the Insurance Code.
It was significantly amended by Republic Act No. 10607 (“Amended Insurance Code”) in 2013 to
strengthen regulation, capitalization, and financial stability of the insurance industry.
The Insurance Code defines key concepts (contract of insurance, insurable interest, types of
insurance), regulates insurance companies (capital, reserves, licensing), and establishes the
powers of the Insurance Commissioner.
It also lays out rules for insurance policies (how they should be written), premiums, claims
(notice of loss), reinsurance, and solvency requirements.
The Code gives the Insurance Commissioner regulatory and supervisory authority over insurers,
agents, brokers, adjusters, etc.
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Detailed Notes on the Insurance Code (PH)
1. General Provisions / Definitions
Defines “contract of insurance” as an agreement to indemnify someone against loss or liability
from an unknown or contingent event.
Defines “doing insurance business”: includes issuing policies, making suretyship contracts (if
the surety is in the insurance business), reinsurance, etc.
Key terms like "insurer," "insured," "premium," and "policy" are clearly defined.
2. Contract of Insurance
Specifies what can be insured (life, property, liability, etc.) as long as there's a contingent event.
Insurable interest: Policyholder must have a genuine interest in the subject matter (for example,
life insurance requires that the insured’s death would harm the policyholder).
Requirements regarding representation, concealment, and warranties: The insured must
disclose material facts; warranties in a policy have legal effects.
Premium payment: Insurer is entitled to premium once the risk is assumed; in many contracts,
coverage does not become binding until premium is paid.
Double insurance and reinsurance are addressed.
3. Policy (the Insurance Policy Document)
Policy must be in a written (printed) form, though some group policies can be typewritten.
Required policy contents: parties (insurer & insured), amount insured, risk, period of coverage,
premium, and subject insured, among others.
Types of policies: open, valued, or running policies.
Cancellation: For non-life policies, insurer can cancel only with prior notice, and only under
certain conditions.
Breach of warranty: If a warranty is breached (without fraud), the insurer may be exonerated
from the time of breach, not necessarily void the whole policy retroactively.
4. Premiums
Insurer’s right to premium arises once risk is assumed.
Receipt of premium or acknowledgment is strong evidence of payment.
Insurer not liable if loss is due to willful act or connivance by the insured.
5. Claims / Loss / Notice
For fire or property insurance: insured must notify insurer “without unnecessary delay” after a
loss.
Preliminary proof of loss: Insured doesn’t have to give full court-level proof right away, but
should give best evidence available at the time.
If insurer delays or omits to object to defects in the notice/proof of loss, they may waive those
grounds.
6. Types or Classes of Insurance
The Code classifies different types of insurance: marine, casualty (non-life), life insurance,
suretyship, microinsurance, etc.
Marine Insurance: specific rules about insurable interest, valuation, etc.
Casualty Insurance: includes accidents, liability, motor vehicle, employer’s liability, theft, health
(non-life) insurance.
Life Insurance: covers human life; policies can pay on death, survival, annuities, etc.
Suretyship: treated in many cases like insurance when done by a surety who is “doing
insurance business.”
Microinsurance: recognized in the amended code (RA 10607).
7. Insurance Companies / Insurers
Definition: domestic vs foreign insurers; includes individuals, partnerships, corporations, etc.
Certificate of Authority: Insurers need to be authorized/licensed by the Insurance Commissioner
to operate legally.
Capitalization: Insurers must meet minimum capital requirements, and there are rules on
invested assets, admitted assets, non-admitted assets.
Reserves: Life insurers must annually value their policies and report reserves; non-life insurers
have provisions for unearned premium reserves.
Single-risk limit: Non-life insurers can’t retain too much risk on any one subject (risk
concentration rule).
8. Reinsurance
Insurers may accept reinsurance, but only within permitted risk limits.
Life insurers need written permission from the Commissioner before reinsuring their whole risk
on an individual life or a large portion.
9. Financial Reporting / Annual Statement
Insurers must file an annual financial statement with the Commissioner, including assets,
liabilities, policy reserves, etc.
False statements are penalized.
For insurers with variable contracts (investment-type policies), they need to file separate
accounts.
Public disclosure: insurers must publish a summary of their financial condition annually in
newspapers.
10. Policy Forms
All policies, applications, endorsements, riders, etc., must be approved by the Insurance
Commissioner before use.
Specific requirements for life insurance policy forms, including disclosures, conditions, and how
policyholder’s rights are documented.
11. Underwriting / Underwriters (Non-Life)
Non-life underwriters must be registered under the Code.
Companies must maintain a risk register (list of accepted risks) and a claims register.
These registers are subject to inspection by the Insurance Commissioner.
12. Rating Organizations / Rate Making
Insurance companies can form “rating organizations” to help set premium rates.
These rating orgs must be licensed.
Misleading representations or sales practices are prohibited: companies, agents, brokers can’t
misstate things about policy benefits, dividends, or comparisons.
Violations (e.g. misrepresentation) can result in fines or revocation of license.
13. Agents, Brokers, Adjusters
Licensing: Agents, brokers, adjusters all need to be licensed under the Code.
Standards: Applicants must pass exams, prove competence, good moral character, etc.
Brokers must post a bond (financial guarantee) when they apply.
The Commissioner can refuse, suspend, or revoke licenses for misconduct (fraud,
misrepresentation, dishonesty, etc.).
For foreign insurers: it’s illegal to solicit insurance in the Philippines without proper authorization.
14. Insurance Commissioner / Regulatory Authority
The Insurance Commissioner (Insurance Commission) has broad powers: regulation, licensing,
supervision, rule-making, and adjudication.
He can issue rulings, circulars, decisions to enforce the Code.
Decisions of the Commissioner can be appealed to the Secretary of Finance.
There are fees: for licenses, certificates of authority, annual statements, etc.
Penalties / criminal sanctions: violations may lead to fines, license revocation, or even crime
depending on the offense.
15. Miscellaneous / Other Provisions
Solvency: Insurers are required to maintain capital, reserves, and make prudent investments.
If any part of the Code is declared invalid, other parts remain in force (separability clause).
The Code repeals conflicting laws; it's the primary regulating law for insurance in PH (unless
otherwise stated).
Statute of limitations: Criminal actions for violation of the Code prescribe (time limit to
prosecute).
16. Amendments / Modernization
Republic Act No. 10607 (2013) amended the Insurance Code: raised capital requirements,
modernized regulatory provisions, and strengthened the Insurance Commission.
These amendments aim to ensure that insurance companies are financially stable, protecting
policyholders and the industry as a whole.