Republic of the Dhilippines i” RECEIVED
HOUSE OF REPRESENTATIVES J pareWaR 03 2020
Queson City “of hy

EIGHTEENTH CONGRESS
First Regular Session

HOUSE BILL No. 6453

Introduced by HON. LUIS RAYMUND “LRAY” F. VILLAFUERTE, JR.

EXPLANATORY NOTE

The country's insurance industry, like the banking and finance industry has a
profound effect on the Philippine economy

Although comparatively small relative to other Southeast Asian countries, the
insurance sector in the Philippines has steadily grown in recent years. With
the economy posting continued growth giving rise to a bourgeoning middle
class, the expansion of the insurance sector is similarly foreseeable. The
effective regulation of the industry therefore stands to foster greater and
equitable development for both insurance companies and the Filipino
consumer of financial products.

Under existing laws, the power of regulating the insurance industry has
always been vested in one person — the Insurance Commissioner.

By redistributing the decision-making powers of the Philippine Insurance
Commission from one (1) sole commissioner to four (4) Commissioners, this
bill seeks to enhance deliberation in the regulation of the insurance industry.
Increasing the number of commissioners also improves inclusivity in the
regulatory body as well as keeps decision-making powers in check by
discouraging arbitrariness in decision-making,

Introducing collegiality also places the Philippine Insurance Commission
alongside other governmer ‘bodies such as the Securities and Exchange
Commission and the Monetary Board of the Bangko Sentral ng Pilipinas that
regulate general corporate and banking industries.

In view of the foregoing, the approval of this bill is earnestly sought.



Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

EIGHTEENTH CONGRESS
First Regular Session

HOUSE BILL NO. 6453

Introduced by HON. LUIS RAYMUND “LRAY” F. VILLAFUERTE, JR.

AN ACT REORGANIZING AND CONVERTING THE INSURANCE
COMMISSION INTO A COLLEGIAL BODY, AMENDING SECTIONS 437,
438, AND 439 OF REPUBLIC ACT NO. 10607, OTHERWISE KNOWN AS

“THE INSURANCE CODE”, AS AMENDED.

Be it enacted by the Senate and House of Representatives of the
Philippines in Congress assembled:

SECTION 1. — Section 437 of Republic Act No. 10607 is hereby amended to

read as follows:
“SECTION 437. THIS CODE SHALL BE ADMINISTERED BY THE
INSURANCE COMMISSION (HEREINAFTER REFERRED TO AS
THE “COMMISSION”), AS A COLLEGIAL BODY, COMPOSED OF A
CHAIRMAN AND FOUR (4) COMMISSIONERS, APPOINTED BY
THE PRESIDENT FOR A TERM OF SIX (6) YEARS EACH AND WHO
SHALL SERVE AS SUCH UNTIL THE SUCCESSOR SHALL HAVE
BEEN APPOINTED AND QUALIFIED. A COMMISSIONER
APPOINTED TO FILL A VACANCY OCCURRING PRIOR TO THE
EXPIRATION OF THE TERM FOR WHICH HIS/HER PREDECESSOR
WAS APPOINTED, SHALL SERVE ONLY FOR THE UNEXPIRED
PORTION OF THEIR TERMS. UNLESS THE CONTEXT INDICATES
OTHERWISE, THE TERM “COMMISSIONER” INCLUDES THE
CHAIRPERSON. ALL PREVIOUS REFERENCES TO THE
“INSURANCE COMMISSIONER” IN THE CODE SHALL HEREBT
REFER TO THE “COMMISSION”.


THE COMMISSIONERS MUST BE NATURAL-BORN CITIZENS OF
THE PHILIPPINES, AT LEAST FORTY (40) YEARS OF AGE FOR
THE CHAIRPERSON AT LEAST THIRTY-FIVE (35) YEARS OF AGE
FOR THE COMMISSIONERS OF GOOD MORAL CHARACTER,
UNQUESTIONABLE INTEGRITY, OF KNOWN PROBITY AND
PATRIOTISM, AND WITH RECOGNIZED COMPETENCE IN
INSURANCE INDUSTRY. HOWEVER, THERE MUST BE AT LEAST
TWO, INCLUDING THE CHAIRMAN THAT SHALL BE MEMBERS
OF THE PHILIPPINE BAR. IN THE EVENT THAT A COMMISSIONER
IS REMOVED BEFORE THE EXPIRATION OF HIS/HER TERM, THE
REASON FOR THE REMOVAL MUST BE PUBLISHED.

THE CHAIRPERSON IS THE CHIEF EXECUTIVE OFFICER OF THE
COMMISSION. THE CHAIRPERSON SHALL EXECURE AND
ADMINISTER THE POLICIES, DECISIONS, ORDERS AND
RESOLUTIONS APPROVED BY THE COMMISSION AND SHALL
HAVE THE GENERAL EXECUTIVE DIRECTION AND SUPERVISION
OF THE WORK AND OPERATION OF THE COMMISSION AND ITS
MEMBERS, BODIES, BOARDS, OFFICES, PERSONNEL AND ALL
ITS ADMINISTRATIVE BUSINESS.

THE SALARY OF THE CHAIRPERSON AND THE
COMMISSIONERS SHALL BE FIXED BY THE PRESIDENT OF THE
PHILIPPINES BASED ON THE OBJECTIVE CLASSIFICATION
SYSTEM AT A SUM COMMENSURATE TO THE IMPORTANCE AND
RESPONSIBILITES ATTACHED TO THE POSITION.

THE COMMISSION SHALL HOLD MEETINGS AT LEAST ONCE A
WEEK FOR THE CONDUCT OF BUSINESS OR AS OFTEN AS MAY
BE NECESSARY UPON THE CALL OF THE CHAIRPERSON OR
UPON THE REQUEST OF THREE (3) COMMISSIONERS. THE
NOTICE OF THE MEETING SHALL BE GIVEN TO ALL
COMMISSIONERS AND THE PRESENCE OF THREE (3)
COMMISSIONERS, EXCLUDING THE CHAIRMAN COMMISSIONER,

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SHALL CONSTITUTE A QUORUM. IN THE ABSENCE OF THE
CHAIRPERSON, THE MOST SENIOR COMMISSIONER SHALL ACT
AS PRESIDING OFFICER OF THE MEETING.

THE COMMISSION MAY, FOR PURPOSES OF EFFICIENCY,
DELEGATE ANY OF ITS FUNCTIONS TO ANY DEPARTMENT OF
OFFICE OF THE COMMISSION, AN INDIVIDUAL COMMISSIONER
OR STAFF MEMBER OF THE COMMISSION EXCEPT ITS REVIEW
OR APPELLATE AUTHORITY AND ITS POWER TO ADOPT, ALTER
AND SUPPLEMENT ANY RULE OR REGULATION. THE
COMMISSION MAY REVIEW UPON ITS OWN INITIATIVE OR UPON
THE PETITION OF ANY NTERESTED PARTY ANY ACTION OF ANY
DEPARTMENT OR OFFICE, INDIVIDUAL COMMISSIONER, OR
STAFF MEMBER OF THE COMMISSION.

SECTION 2. Anew section, Section 437-A is hereby inserted to Republic Act

No. 10607 to read as follows:
“Section 237-A. The COMMISSION shall have the duty to see that all
laws relating to insurance, insurance companies and other insurance
matters, mutual benefit associations, and trusts for charitable uses are
faithfully executed and to perform the duties imposed by this Code, and
shall, notwithstanding any existing laws to the contrary, have sole and
exclusive authority to regulate the issuance and sale of variable
contracts as defined in Section 238 hereof and to provide for the
licensing of persons selling such contracts, and to issue such
reasonable rules and regulations governing the same.

The COMMISSION may issue such rulings, instructions, circulars,
orders and decisions as may be deemed necessary to secure the
enforcement of the provisions of this Code, to ensure the efficient
regulation of the insurance industry in accordance with global best
practices and to protect the insuring public. Except as otherwise
specified, decisions made by the COMMISSION shall be appealable to
the GOVERNOR OF THE BANGKO SENTRAL NG PILIPINAS.


In addition to the foregoing, the COMMISSION shall have the following
powers and functions:
200
(g) Punish for contempt of the COMMISSION, both direct and
indirect, in accordance with the pertinent provisions of and
appropriate penalties prescribed by the Rules of Court;
0K
(0) To fix and assess fees, charges and penalties as the
COMMISSION may find reasonable in the exercise of
regulation; and
OK
The Commission shall indemnify the COMMISSIONERS and other
officials of the Commission, including personnel performing supervision
and examination functions, for all costs and expenses reasonable
incurred by such persons in connection with the any civil or criminal
actions, suits or proceedings to which they may be made a party to by
the reason of the performance of their duties and functions, unless they
are finally adjudged in such actions, suits or proceedings to be liable
for negligence or misconduct.
20K
The costs of expenses incurred in defending the aforementioned
action, suit or proceeding may be paid by the Commission in advance
of the final disposition of such action, suit, or proceeding upon receipt
of an undertaking by or on behalf of the COMMISSIONERS, office or
employee to repay the amount advanced should it ultimately be
determined by the Commission that the person is not entitled to be
indemnified.

SECTION 3. Section 438 of Republic Act No. 10607 is hereby amended to
read as follows:

“Section 438. In addition to the administrative sanctions provided
elsewhere in this Code, the Insurance COMMISSION is hereby
authorized, at ITS discretion, to impose upon insurance companies,
their directors and/or officers and/or agents, for any willful failure or

5


refusal to comply with, or violation of any provision of this Code, or any
order, instruction, regulation, or ruling of the Insurance COMMISSION,
the following:

SECTION 4. Section 439 of Republic Act No. 10607 is hereby amended to

read as follows:
“Section 439. The COMMISSION shall have the power 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 under a contract of
suretyship, or for which a reinsurer may be sued under any contract of
reinsurance it may have entered into; or for which a mutual benefit
association may be held liable under the membership certificates it has
issued to its members, where the amount of any such loss, damage or
liability, excluding interest, cost and attorney's fees, being claimed or
sued upon any kind of insurance, bond, reinsurance contract, or
membership certificate does not exceed in any single claim Five million
pesos (P5,000,000.00).

“The power of the COMMISSION does not cover the relationship
between the insurance company and its agents/brokers but is limited to
adjudicating claims and complaints filed by the insured against the
insurance company.

“The COMMISSION may authorize any officer or group of officers
under him to conduct investigation, inquiry and/or hearing and decide
claims and he may issue rules governing the conduct of adjudication
and resolution of cases. The Rules of Court shall have suppletory
application.

“The party filing an action pursuant to the provisions of this section
thereby submits his person to the jurisdiction of the COMMISSION.
The COMMISSION shall acquire jurisdiction over the person of the
impleaded party or parties in accordance with and pursuant to the

provisions of the Rules of Court


“The authority to adjudicate granted to the COMMISSION under this
section shall be concurrent with that of the civil courts, but the filing of a
complaint with the COMMISSION shall preclude civil courts from taking
cognizance of a suit involving the same subject matter.

“Any decision, order or ruling rendered by the COMMISSION after a
hearing shall have the force and effect of a judgement. Any party may
appeal from a final order, ruling or decision of the COMMISSION by
filing with the COMMISSION within thirty (30) days from receipt of copy
of such order, ruling or decision a notice of appeal to the Court of
Appeals in the manner provided for in the Rules of Court for appeals
from the regional Trial Court to the Court of Appeals.

“For the purpose of any proceeding under this section,

the COMMISSION or any officer thereof designated [by him] is
empowered to administer oaths and affirmation, subpoena witnesses,
compel their attendance, take evidence, and require the production of
any books, papers, documents, or contracts or other records which are
relevant or material to the inquiry.

“A {ull and complete record shall be kept of all proceedings had before
the COMMISSION, or the officers thereof designated by him, and all
testimony shall be taken down and transcribed by a stenographer
appointed by the COMMISSION.

“In order to promote party autonomy in the resolution of cases,
the COMMISSION shall establish a system for resolving cases through
the use of alternative dispute resolution.

SECTION 5. Separability Clause. — If any provision of this Act shall be held
unconstitutional or invalid, the other provisions not otherwise affected shall
remain in full force and effect.

SECTION 6. Repealing Clause. — All laws, decrees, executive orders, rules
and regulations or parts thereof which are contrary to or inconsistent with this
Act are hereby repealed, amended or modified accordingly.


SECTION 7. Effectivity. — This Act shall take effect fifteen (15) days after its
complete publication either in the Official Gazette or in a newspaper of
general circulation.

Approved,