Republic of the Philippines

HOUSE OF REPRESENTATIVES
‘Quezon City

MEMORANDUM
FOR : ATTY. ARTEMIO ADASA.

Deputy Secretary General
ATTENTION : ATTY, CESAR, PAREIA

Executive Director, Plenary Affairs Office
supiecr = ~~ commirree neporTo._1246

We are transmitting herewith six (6} copies of the, Committee, “HES submitted by the
Committee on Banks and Financial Intermediaries on fiouse Bill No entitled:

“AN ACT
STRENGTHENING THE INSURANCE INDUSTRY, FURTHER AMENDING FOR THE PURPOSE
PRESIDENTIAL DECREE NO. 612, OTHERWISE KNOWN AS THE INSURANCE CODE”

For your appropriate action.

ARLEAIE C, DADA-ARNALDO
Deputy Secretary General for Committee Affai ¢ !



Republic of the Philippines
House of Representatives
Ouegon City

FIFTEENTH CONGRESS
First Regular Session

comairee neoonr wo 2.46 asin tt

Submitted by the Committee on Banks and Financial intermediaries on
ve

ne: Hole bittno. 4ABE7

feecommending its approval, in substitution of House Bill: No, 1502, 3797, 2672 and 2948

‘Sponsors: Representatives Sergio A. F. Apostal and Guillermo A, Romarate Jr,

Mr, Speaker
The Cammittee on Banks and Financial Intermediaries to which were referred:

House Bill No, 1502 intraduced by Representative Angara, entitled: “AN ACT AMENDING
PD NO, 612, AS AMENDED, OTHERWISE KNOWN AS THE INSURANCE CODE, AS AMENDED
BY PD NOS, 1141, 1280, 1455, 1460, 1814 & 1981, AND BP 874, AND FOR OTHER
PURPOSES,”

House Bill No. 3797, introduced by Representative Mandanas, entitled; “AN ACT
AMENDING PD NO, 612, AS AMENDED, OTHERWISE KNOWN AS THE INSURANCE CODE, AS
AMENDED BY PD NOS, 1141, 1280, 1455, 1460, 1814 & 1921, AND €P 874, AND FOR
OTHER PURPOSES,”

House Bill No, 2672, introduced by Representative Haresco, J, entitled: “AN ACT
AMENDING SECTION 385 OF PO NO. 1460, AS AMENDED BY PD 1455, OTHERWISE KNOWN
‘AS THE INSURANCE CODE OF THE PHILIPPINES,” and

House Bill No, 2988, intraduced by Representative Ejercito, entitled “AN ACT AMENDING
SECTION 385 OF PD NO. 1460, AS AMENDED BY PD 1455, OTHERWISE KNOWN AS THE
INSURANCE CODE OF THE PHILIPPINES”

has considered the same and recommends that the attached bill, entitled

“AN ACT
STRENGTHENING THE INSURANCE INDUSTRY, FURTHER AMENDING FOR THE PURPOSE PRESIDENTIAL DECREE
NO. 612, OTHERWISE KNOWN AS THE INSURANCE CODE”

be approved in substitution of House Bills No. 1502, 3797, 2672 and 2988 with Representatives Angara,
Mandanas, Apostol, Romarate, Maresco, Ejercito, Cortuna, Villarosa, Pichay, Aggabao, Lico, Lapus, Villafuerte,
and Ty as co-authors thereof.

Respectfully submitted,

SERGIOA. F APOSTOL
Chairgfan

‘The HONORABLE SPEAKER
HOUSE OF REPRESENTATIVES


FACT SHEET

Hotige Bilt No, 4867
(Substitute bill to HB. No. 1502, 3797, 2672 and 2988)

AMENDMENTS TO THE INSURANCE CODE

Introduced by: REPRESENTATIVES ANGARA, MANDANAS, APOSTOL, ROMARTE, et. af

Committee Referral: COMMITTEE ON BANKS & FINANCIAL INTERMEDIARIES
Chairperson: REPRESENTATIVE SERGIO A F. APOSTOL

OBJECTIVE

To promote and develop a stronger national insurance industry.

KEY PROVISIONS

+. Expands the definition of “doing an insurance business" to include the practice of self-
insurance by any person or entity extending life insurance oF similar protection to its
borrowers, depositors, clients or third parties.

2. Deems irrevocable the designation of a beneficiary designation in the event the insured does
ot change the beneficiary during his Ife tme.

Allows premium paymert by any goverment employee thru salary deduction
Provides for regulations on *Microinsurance™

Increases minimum paid-up capitat stock requirements for insurance companies.

ow aw

Adopts intemational standards on solvency requitement.
7. Adds new forms of admitted assets such as mutual funds, real estate investment trusts,
salary loans, unit investment trust funds and special deposit accounts and other assets which
are deemed by the Commissioner to be readily realizable and available for the payment of
losses and claims at values to be determined by him.

8. Grants the Commissioner the authonty to make, amend, and rescind accounting rules and
regulations, and define accounting, technical and trade terms in accordance with
intemavonally accepted accounting standards,

9. Adds @ new title on "Bancassurance.”

10, Authorizes insurance companies to engage in trust business operations.

11. Grants the Commissioner the authority to register self-regulatory organizations whose
operations are related to or connected to insurance

RELATED LAW: Presidential Decree No. 612, as amended.

a



roa

oer snes -

Republic of the Philippines
. HOUSE OF REPRESENTATIVES.
Quezon City

FIFTEENTH CONGRESS.

First Regular Session
House suno. 4867 ‘
1246

{In substitution of House Bills No. 1502, 3797, 2672 and 2988, per Committee Report No. *}

Introduced by Representatives Angara, Mandanas, Apostol, Romarate, Haresco, Ejercito, Cortuna,
Villarose, Pichay, Aggabao, , Lico, Lapus, Villafuerte, and Ty

AN ACT
STRENGTHENING THE INSURANCE INDUSTRY, FURTHER AMENDING FOR THE PURPOSE
PRESIDENTIAL DECREE NO. 612, OTHERWISE KNOWN AS THE INSURANCE CODE

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

SECTION 1. Section 2, paragraph 2 (d) of the insurance Code, as amended, is hereby
amended to read as follows

“(d) doing oF proposing to do any business in substance equivalent to any of the foregoing

in. a manner designed to evade the provisions of this Code, INCLUDING THE PRACTICE
OF SELF-INSURANCE 8Y ANY PERSON OR ENTITY EXTENDING LIFE INSURANCE OR
SIMILAR PROTECTION TO ITS BORROWERS, DEPOSITORS, CLIENTS OR THIRD PARTIES.”

SEC 2. Section 3 of the Insurance Code is bereby amended to read as follows:

“Sec. 3. Any contingent or unknown event, whether past or future, which may damnify a
person having an insurable interest, or create a liability against him, may be insured against, subject
to the provisions of this chapter.

“The consent of the {husband} SPOUSE is not necessary for the validity of an insurance poticy
taken out by a married [weman} PERSON on [her] THEIR fife or that of [her] THEIR children.

“[Any-minor of the-age_of eightees-years-or more, may notwithstanding such-minority,
contract for life_health end accident HROACE With -any is e any duly authorized-to de



ne

Cmdr AaAuan

“Ail rights, title and interest in the policy of insurance taken out by an original owner on the

{ife or health of [asninor} THE PERSON INSURED shail automatically vest in the [aniner} LATTER upon

the death of the original owner, unless otherwise provided for in the pol

SEC. 3. Section 6 of the Insurance Code is hereby amended to read as follows:

sec. 6. Every [persen} CORPORATION, partnership, OR association, [er-corperation] duly
authorized to transact insurance business as elsewhere provided in this code, may be an insurer.”

SEC. 4, Section 11 of the the Insurance Code is hereby amended to read as follows:

“Sec. 11. The insured shall have the right to change the beneficiary he designated in the
policy, unless he has expressiy waived this right in said policy.

“NOTWITHSTANDING THE FOREGOING, IN THE EVENT THE INSURED DOES NOT CHANGE THE
BENEFICIARY DURING HIS LIFETIME, THE DESIGNATION SHALL BE DEEMED IRREVOCABLE.”

SEC. 5. Section 12 of the Insurance Code is hereby amended to read as follows:

“Sec, 12, The interest of a beneficiary in a life insurance policy shall be forfeited when the
beneficiary is the principal, accomplice, or accessory in willfully bringing about the death of the
insured; fin_which-oventthe_-nesrest_relative-of the insured shall receive the proceeds of said
insurance net otherwise disqualified]. IN SUCH A CASE, THE SHARE FORFEITED SHALL PASS ON TO

THE OTHER BENEFICIARIES, UNLESS OTHERWISE DISQUALIFIED. IN’ THE ABSENCE OF OTHER
BENEFICIARIES, THE PROCEEDS SHALL BE PAID IN ACCORDANCE WITH THE POLICY CONTRACT. If THE
POLICY CONTRACT IS SILENT, THE PROCEEDS SHALL BE PAID TO THE ESTATE OF THE INSURED. ”

SEC. 6. Section 50 of the Insurance Code is hereby amended to read 2s follows:

“See. 50. The policy shall be in printed form which may contain blank spaces; and any word,
phrase, clause, mark, sign, symbol, signature, number, or word necessary to complete the contract
of insurance shall be written on the blank spaces provided therein.

“any rider, clause, warranty or endorsement purporting to be part of the contract of
insurance and which is pasted or attached to said policy is not binding on the insured, uniess the
descriptive title or name of the rider, clause, warranty or endorsement is also mentioned and
written on the blank spaces provided in the policy.

“unless applied for by the insured or owner, any rider, clause, warranty or endorsement
issued after the original policy shall be countersigned by the insured or owner, which

countersignature shall be taken as his agreement ta the contents of such rider, clause, warranty or

‘endorsement.

woe: tyne SBAYES oo

SEC. 7. Section 60 of the Insurance Code is hereby amended to read as follows:



Cer Ana

wy ue La we
ose 8

&

“Sec. 60. An open policy is one in which the value of the thing insured is nat agreed upon.

[but is left-40-be ascertained in-case-of- tess} AND THE AMOUNT OF THE INSURANCE MERELY
REPRESENTS THE INSURER'S MAXIMUM LIABILITY. THE VALUE OF SUCH THING INSURED SHALL BE
ASCERTAINED AT THE TIME OF THE LOSS.”

SEC. 8. Section 64 of the Insurance Code is hereby amended to read as follows:

“Sec. 64. No policy of insurance other than life shail be cancelled by the insurer except upon
/e unless it is based

prior notice thereof to the insured, and no notice of cancellation shall be effer
on the occurrence, after the effective date of the policy, of one or more of the following:

(a) son-payment of premium;
2 arising out of acts increasing the hazard insured against;

tb) conviction of 2

{c)__ discovery of fraud or material misrepresentation;

{d) discovery of willful or reckless acts or omissions increasing the hazard insured against;

(e) physical changes in the property insured which result in the property becoming
uninsurable; .

(f) DISCOVERY OF OTHER INSURANCE COVERAGE THAT MAKES THE TOTAL INSURANCE IN
EXCESS OF THE VALUE OF THE PROPERTY INSURED: OR

Alig) a determination by the Commissioner that the continuation of the policy would violate
‘or would place the insurer in violation of this Code.”

SEC. 9. A new Section 78-A is hereby added to the Insurance Code, to read as follows:

“SEC. 78-A. EMPLOYEES OF THE REPUBLIC OF THE PHILIPPINES, INCLUDING [TS POLITICAL

SUBDIVISIONS AND INSTRUMENTALITIES, AND GOVERNMENT OWNED QR CONTROLLED

CORPORATIONS, MAY PAY THEIR INSURANCE PREMIUMS AND LOAN OBLIGATIONS THROUGH
SALARY DEDUCTION: PROVIDED, THAT THE TREASURER, CASHIER, PAYMASTER OR OFFICIAL OF THE
ENTITY EMPLOYING THE GOVERNMENT EMPLOYEE IS AUTHORIZED, NOTWITHSTANDING THE
PROVISIONS OF ANY EXISTING LAW, RULES AND REGULATIONS TO THE CONTRARY, TO MAKE
DEDUCTIONS FROM THE SALARY, WAGE OR INCOME OF THE LATTER PURSUANT TO THE
AGREEMENT BETWEEN THE INSURER AND THE GOVERNMENT EMPLOYEE AND TO REMIT SUCH
DEDUCTIONS TO THE INSURER CONCERNED, AND COLLECT SUCH REASONABLE FEE FOR ITS
SERVICES.”
SEC. 10. Section 81 of the Insurance Code is hereby amended to read as follows:

entitled to return of the premium when the contract is

“Sec. 81. A person insured
voidable, AND SUBSEQUENTLY ANNULLED UNDER THE PROVISIONS OF THE CIVIL CODE; OR on

account of fraud or misrepresentation of the insurer, or of his agent; or on account of facts, the
When by any default of the

existence of which the insured was ignorant OF without his fault; or when

insured other than actual fraud, the insurer never incurred any liability under the poficy.



uy uw
Bess

w

“A PERSON INSURED |S NOT ENTITLED TO A RETURN OF PREMIUM IF THE POLICY IS
ANNULLED, RESCINDED OR IF A CLAIM IS DENIED BY REASON OF FRAUD. “ ~~

SEC. 11. Section 82 of the Insurance Code is hereby amended to read as follows:

“Sec. 82. In case of an over-insurance by several insurers OTHER THAN LIFE, the insured Is
entitled to a ratable return of the premium, proportioned to the amount by which the agaregate
sum insured in all the policies exceeds the insurable valve of the thing at risk.”

SEC. 12. Anew Section 82-A is hereby added to Title 8, Chapter 1 of the Insurance Code, to
read as follows:

"SEC. 82-A. AN INSURER MAY CONTRACT AND ACCEPT PAYMENTS, IN ADDITION TO
REGULAR PREMIUM, FOR THE PURPOSE OF PAYING FUTURE PREMIUMS ON THE POLICY OR TO
INCREASE THE BENEFITS THEREOF”

SEC. 13. Section 88 of the Insurance Code is hereby amended to read as follows:

“Sec. 88. In case of loss upon an insurance against fire, an insurer is exonerated, if notice
thereof be not given to him by an insured, or some persan entitled to the benefit of the insurance,
[without-unnecessorydelay] WITHIN THIRTY DAYS FROM OCCURRENCE OF THE LOSS. FOR OTHER
NON-LFE INSURANCE, THE NOTICE OF LOSS SHALL BE SUBMITTED WITHIN ONE YEAR. IN CASE OF
DEATH, AN INSURER IS LIKEWISE EXONERATED IF NOTICE THEREOF BE NOT GIVEN THE INSURER
WITHOUT UNNECESSARY DELAY FROM DISCOVERY OF DEATH.”

SEC. 14. Section 179 of the Insurance Code is hereby amended to read as follows:

“Sec. 179. Life insurance is Insurance on human lives and insurance appertaining thereto or
connected therewith.

“EVERY CONTRACT OR UNDERTAKING FOR THE PAYMENTS OF ANNUITIES INCLUDING
CONTRACTS FOR THE PAYMENT OF LUMP SUMS UNDER A RETIREMENT PROGRAM WHERE A LIFE
INSURANCE COMPANY MANAGES OR ACTS AS A TRUSTEE FOR SUCH RETIREMENT PROGRAM SHALL
BE CONSIDERED A LiFE INSURANCE CONTRACT FOR PURPOSES OF THIS CODE."

SEC. 15. Section 180 of the insurance Code is hereby amended to read as follows:

“Sec. 180, An insurance upon life may be made payable on the death of the person, or on

his surviving a specified period, or otherwise contingently on the continuance or cessation of lif
Every contract or pledge for the payment of endowments or annuities shall be considered a life
insurance contract for purpose of this Code.

“In the absence of a judicial guardian, the father, or in the latter's absence or incapacity, the
ured or a beneficiary under a contract of life, health or accident

mother, or any minor, who is 21
insurance, may exercise, in behalf of said minor, any right under the policy, without necessity of

court authority or the giving of a bond, where the interest of the minor in the particular act involved

‘does not exceed [awenty-theucand} FIVE HUNDRED THOUSAND pesos OR IN SUCH AMOUNT AS



oN A mw

MAY BE DETERMINED BY THE COMMISSIONER. Such right may include, but shall not be limited to,
obtaining a policy loan, surrendering the policy, receiving the proceeds of the policy, and giving the
minor's consent to arly transaction on the policy.

“IN THE ABSENCE OR IN CASE OF THE INCAPACITY OF THE FATHER OR MOTHER, THE
GRANDPARENT, THE £LDEST BROTHER OR SISTER AT LEAST EIGHTEEN YEARS OF AGE, OR ANY
RELATIVE WHO HAS ACTUAL CUSTODY OF THE MINOR INSURED OR BENEFICIARY, SHALL ACT AS A
GUARDIAN WITHOUT NEED OF A COURT ORDER OR JUDICIAL APPOINTMENT AS SUCH GUARDIAN,
AS LONG AS SUCH PERSON |S NOT OTHERWISE DISQUALIFIED OR INCAPACITATED. PAYMENT MADE
By THE INSURER PURSUANT TO THIS SECTION SHALL RELIEVE SUCH INSURER OF ANY LIABILITY

UNDER THE CONTRACT”
SEC. 16, Anew Title 6 on MICROINSURANCE and Section 183-A are hereby added in Chapter

of the Insurance Cade, to read as follows:
“TITLE 6
“MICROINSURANCE

“SEC. 183-A. THE TERM “MICROINSURANCE” SHALL MEAN AN ACTIVITY PROVIDING
‘SPECIFIC INSURANCE THAT MEETS THE NEEDS OF THE LOW-INCOME SECTOR FOR RISK PROTECTION
AND REUEF AGAINST DISTRESS, MISFORTUNE AND OTHER CONTINGENT EVENTS. THIS SHALL
INCLUDE ALL FORMS OF INSURANCE WITH THE FOLLOWING FEATURES: A) PREMIUMS,
CONTRIBUTIONS, FEES OR CHARGES ARE COLLECTED/DEDUCTED PRIOR TO THE OCCURRENCE OF
‘THE CONTINGENT EVENT; AND B} GUARANTEED BENEFITS ARE PROVIDED UPON OCCURRENCE OF
THE CONTINGENT EVENT.

*NO INSURANCE COMPANY SHALL ENGAGE IN THE BUSINESS OF MICROINSURANCE UNLESS
IT POSSESSES ALL THE REQUIREMENTS AS MAY BE PRESCRIBED BY THE COMMISSIONER. THE
‘COMMISSIONER SHALL ISSUE SUCH RULES AND REGULATIONS GOVERNING MICROINSURANCE.”

SEC. 17. Section 184 of the Insurance Code is hereby amended to read as follows:

“Sec. 184. For purposes of this Code, the term “insurer” or “insurance company" shall include
all [tdividwele} partnerships, associations, COOPERATIVES or corporations, including government-
‘owned or controlled corporations or entities, engaged as principals in the insurance business,
‘excepting mutual benefit associations. Unless the context otherwise requires, the terms shall also
include professional reinsurers defined in section two hundred eighty. "Domestic company” shall
include companies formed, organized or existing under the laws of the Philippines. "Foreign
company” when used without limitation shall include companies formed, organized, or existing
under any laws other than those of the Philippines.”

SEC. 18, Section 185 of the Insurance Code is hereby amended to read as follows:



“Sec. 185. [Gorperations formed-or-organized +0-saveany_person- oF persens-or other
“Corporations harmless fromloss-<darnage—or Hability-arising-from—any—unknownor—furtire—OF
Cor: oF te-indemmnify arte ipensate-any pert ia other corporations for
apysucn toss damage o-Habilty: gust pete: 2 0

Enrporstions:)”
“The provisions of the Corporation [law] CODE, AS AMENDED, shall apply to all insurance

corporations now or hereafter engaged in business in the Philippines insofar as they do not conflict
with the provisions of this chapter.”

SEC. 19. Section 186 of the Insurance Code is hereby amended to read as foltows:

“Sec. 186. No [person] CORPORATION, partnership, or association of persons shall transact
any insurance business in the Philippines except as agent of a [persen-er] corporation, PARTNERSHIP
OR ASSOCIATION authorized to do the business of insurance in the Philippines, uniess possessed of
the capital and assets required of an insurance corporation doing the same kind of business in the
Philippines and invested in the same manner; [er] OR unless the Commissioner shall have granted
[to-him-or them] a certificate to the effect that (heer they} IT [have} HAS complied with all the
provisions of [law-which-sp-insurance-cotporation doing-business-tn-the Philippines is required to
‘e@bserve} THIS CODE.

“Every [person;_partnarshipor_asseciation] ENTITY receiving any such certificate of

authority shall be subject to the insurance AND OTHER APPLICABLE iaws of the Philippines and to the
jurisdiction and supervision of the Commissioner {in the-same-manneras-ifandnsuronce corperation
authorized-by-the-taws- of the Philippines to-engege-in-the-business-of insurance specified-in-the

certifieste).”
SEC. 20. Section 187 of the Insurance Cade is hereby amended to read as follows:

“Sec, 187. No insurance company shall transact any insurance business in the Philippines
until after it shall have obtained a certificate of authority for that purpose from the Commissioner
upon application therefor and payment by the company concerned of the fees hereinafter
prescribed.

“The Commissioner may refuse to issue a certificate of authority to any insurance company
if, in his judgment, such refusal wilt best promote the interest of the people of this country. No such
certificate of authority shall be granted to any such company until the Commissioner shall have
satisfied himself by such examination as he may make and such evidence a5 he may require that
such company is qualified by the laws of the Philippines to transact business therein, thet the grant

of such authority appears to be justified in the light of economic requirements, and that the

direction and administration, as well as the integrity and responsibility of the organizers and
Fs parade Sin & eee agg



i)

aA aw

oe we ow
SRE S

policyholders and the public.
“In order to maintain the quality of the management of the insurance companies and afford

better protection to policyholders and the public in general, any person of good moral character,
unquestioned integrity and recognized competence may be elected or appointed director or officer
‘of insurance companies IN ACCORDANCE WITH THE PERTINENT PROVISIONS CONTAINED IN THE
CORPORATE GOVERNANCE CIRCULARS PRESCRIBED BY THE COMMISSIONER. IN ADDITION HERETO,
the Commissioner shall prescribe the qualifications of DIRECTORS, [the] executive officers and other

surance companies for purposes af this section

key officials o
“No person shall concurrently be a director and/or officer of an insurance company and an

adjustment company.

or pent-d di/or-of Hected-by-the-ab
hold heir-posit iL-the-end-of-thi wo-years-from-the-ctf thi
decree whichever shorter]

“Before issuing such certificate of authority, the commissioner must be satisfied that the
name of the company is not that of any other known company transacting a similar business in the
Philippines, or a name so similar as to be calculated to mislead the public, THE COMMISSIONER MAY
ISSUE RULES AND REGULATIONS ON THE USE OF CORPORATE NAMES OF INSURANCE COMPANIES

AND OTHER SUPERVISED PERSONS OR ENTITIES.
“[Such centiticate-oLawthoney shale he-last-doy-obLhine-oLeachyesrand-shallbe

wo: ly ifthe pany inuing. yy withthe

" " de ft  JEvery company receiving any such

certificates of authority shall be subject to the provisions of this Code and other related laws and to
the jurisdiction and supervision of the Commissioner .

“No insurance company may be authorized to transact in the Philippines the business of life
and norelife insurance concurrently unless specifically authorized to do so BY.THE COMMISSIONER:
Provided, That the terms "life" and “non-life” insurance shall be deemed to include health, accident

and disability insurance.
“No insurance company shall have equity in an adjustment company and neither shall an

adjustment company have an equity in an insurance company.

Teresa jes ond adi

i tly atfected-by the abs wi

“NO INSURANCE COMPANY ISSUED WITH A VALID CERTIFICATE OF AUTHORITY TO

TRANSACT INSURANCE BUSINESS ANYWHERE IN THE PHILIPPINES BY THE INSURANCE
doer .



we

Ce WD AHA

SHALL 8€ BARRED, PREVENTED, OR DISENFRANCHISED FROM ISSUING ANY

COMMISSIONER,

INSURANCE POLICY OR FROM TRANSACTING ANY INSURANCE BUSINESS WITHIN THE SCOPE OR
COVERAGE OF ITS CERTIFICATE OF AUTHORITY, ANYWHERE IN THE PHILIPPINES, BY ANY LOCAL

GOVERNMENT UNIT OR AUTHORITY, FOR WHATEVER GUISE OR REASON WHATSOEVER, INCLUDING
UNDER ANY KIND OF ORDINANCE, ACCREDITATION SYSTEM, OR SCHEME. ANY LOCAL ORDINANCE
OR LOCAL GOVERNMENT UNIT REGULATORY !SSUANCE IMPOSING SUCH RESTRICTION OR
DISENFRANCHISEMENT ON ANY INSURANCE COMPANY SHALL BE DEEMED NULL AND VOID AB
INITIO.”

SEC. 21. Section 188 of the Insurance Code is hereby amended to read as follows:

“Sec. 188. Except as provided In section twa hundred eighty-one, no NEW domestic LIFE OR
NON-UFE insurance company shalt, in a stock corporation, engage in’ business in the Philippines
unless possessed of a paid-up capital stock equal to at least five HUNDRED million pesos: Provided,
‘That a domestic insurance company already doing business in the Philippines [with-e-paid-up-copital

; ‘ ‘ st

@ the safety_of the ef the_policyholders-and_the public] SHALL HAVE A PAID-UP

CAPITAL BY DECEMBER 31, 2012, OF ONE HUNDRED SEVENTY FIVE MILLION PESOS FOR AN
INSURANCE COMPANY WITH LESS THAN FORTY PERCENT (40%) FOREIGN EQUITY, OF THREE
HUNDRED FIFTY MILLION PESOS FOR AN INSURANCE COMPANY WITH FORTY PERCENT (40%) 8UT
LESS THAN SIXTY PERCENT (60%) FOREIGN EQUITY, AND FIVE HUNDRED MILLION PESOS FOR AN
INSURANCE COMPANY WITH AT LEAST SIXTY PERCENT (60%) FOREIGN EQUITY: PROVIDED FURTHER,
THAT THE PRESENT RULES OR DEPARTMENT ORDERS ON CAPITALIZATION SHALL CONTINUE TO
APPLY PRIOR TO THE EFFECTIVE DATE OF INCREASE UNDER THIS SECTION.

“The Commissioner may, as 2 pre-licensing requirement of a new insurance company, in
addition to the paid-up capital stock, require the stockholders to pay in cash to the company in
proportion to their subscription interests a contributed surplus fund of not less than ene ONE

HUNDRED million pesos {,-i9-the-case-of-a-tife-insurance_company,-or-notless than five-hundred
housand. sin the Lan insun wapanyetherthantife]. He may also require such

company to submit to him a business plan showing the company's estimated receipts and

ursements, as well as the basis therefor, for the next succeeding three years.



34

“If organized as 2 mutual company, in lieu of such capital stock, it must have available cash

‘assets of at least ONE HUNDRED SEVENTY FIVE MILLION PESOS AS OF DECEMBER 31, 2012 above all
liabilities for losses reported, expenses, taxes, legal reserve, and reinsurance of all outstanding risks,
and the contributed surplus fund equal to the amounts required of stock corporations. A stock
insurance company doing business in the Philippines may, subject to the pertinent law and
regulations which now [are-ef] OR hereafter may be in force, alter its organization and transform
itself into 2 mutual insurance company.

“THE SECRETARY OF FINANCE MAY, UPON RECOMMENDATION OF THE COMMISSIONER,
INCREASE SUCH MiNIMUM PAID-UP CAPITAL STOCK OR CASH ASSETS REQUIREMENT UNDER SUCH
TERMS AND CONDITIONS AS HE MAY IMPOSE, TO AN AMOUNT WHICH, IN HIS OPINION, WOULD
REASONABLY ASSURE THE SAFETY OF THE INTERESTS OF THE POLICYHOLDERS AND THE PUBLIC.
THE MINIMUM PAID-UP CAPITAL REQUIREMENT MUST REMAIN UNIMPAIRED FOR THE
CONTINUANCE OF THE LICENSE, THE COMMISSIONER MAY REQUIRE THE ADOPTION OF THE RISK-
BASED CAPITAL APPROACH AND OTHER INTERNATIONALLY ACCEPTED FORMS OR CAPITAL
FRAMEWORK.”

SEC. 22. Section 191 of the Insurance Code is hereby amended to read as follows:

“Sec. 191. No Insurance company organized or existing under the government or laws other
than those of the Philippines shall engage in business in the Philippines unless possessed of [paid-up]
unimpaired capital or assets and reserve OF NOT LESS THAN FIVE HUNDRED MILLION PESOS, [not
Jese-than that-herein- requited-ef demestic insurance-companies,] nor until it shall have deposited
with the Commissioner for the benefit and security of the policyholders and creditors of such
ippines, securities satisfactory to the Commissioner consisting of good securities

company in the P
‘of the Philippines, including new issues of stock of “registered enterprises”, as this term is defined in

[Republic Act No- 5186, otheawise known a: the investment ncentivesAet] OMNIBUS INVESTMENTS

CODE as amended, to the actual market value of not less than THE AMOUNT HEREIN REQUIRED [the
raum-paid-up-capital .d-of domestic insurance companies): Provided, That at least fifty

perCENT centum of such securities shall consist of bonds or other evidences of debt of the

Government of the Philippines, its political subdivisions and instrumentalities, or of government
‘owned or controlled corporations and entities, including the [Centrat-Bank} BANGKO SENTRAL NG
PILIPINA: PROVIDED FURTHER, THAT the total investment of a foreign insurance company in any
registered enterprise shall not exceed twenty per centum of the net worth of said foreign insurance
company nor twenty per cent of the capital of the registered enterprise, unless previously authorized

in writing by the Commissioner.
“THE COMMISSIONER MAY, AS A PRE-LICENSING REQUIREMENT OF A NEW BRANCH OFFICE

35 <j, OF A FOREIGN INSURANCE COMPANY, IN ADDITION TO THE REQUIRED ASSET OR NET WORTH,

Negras Saati a a

wa bgt Be pe Ge toe

: 9 Senet



i

ZS cen anee

REQUIRE THE COMPANY TO HAVE AN ADDITIONAL SURPLUS FUND OF NOT LESS THAN ONE

HUNDRED MILLION PESOS.
“For purposes of this Code, the net worth of a foreign insurance company shall refer only to

its net worth in the Philippines.”

SEC. 23. Section 192 of the Insurance Code is hereby amended to read as follows:

“Sec, 192. The Commissioner shall hold the securities, deposited as aforesaid REQUIRED IN
THE IMMEDIATELY PRECEDING SECTION, for the benefit and security of all the policyholders AND
CREDITORS of the company depositing the same: {, ‘ut-chail] PROVIDED, THAT THE COMMISSIONER:
MAY as long as the company is solvent, permit the company to collect the interest or dividends on
the securities so deposited, and, from time to time, with his assent, to withdraw any of such
securities, upon depositing with said Commissioner other like securities, the market value of which
shall be equal to the market value of such as may be withdrawn. In the event of any company
ceasing to do business in the Philippines the securities deposited as aforesaid shall be returned upon
the [company's-making-application therefor and-proving-to-the satisfaction of the Commissioner}
COMPANY UPON THE COMMISSIONER'S WRITTEN APPROVAL AND ONLY AFTER THE COMPANY HAS:

DULY PROVEN IN ITS APPLICATION THEREFOR that it has no further liability WHATSOEVER under any

of its policies NOR TO ANY OF ITS CREDITORS in the Philippines.
SEC, 24. Title 2 of Chapter Ill of the insurance Code is hereby amended to read as follows:
“Title 2. [MARGIN-OFINSOLVENGH SOLVENCY”
SEC. 25. Section 194 of the Insurance Code is hereby amended to read as follows:
“Sec. 194. An insurance company doing business in the Philippines shall at all times maintain
THE PRESCRIBED SOLVENCY REQUIREMENT WHICH SHALL BE BASED ON INTERNATIONALLY
ACCEPTED SOLVENCY FRAMEWORKS [margin cf solvency which shail be-an-excess of thevalue oFits
ienitted- exclusive of its paid-up -capital inthe cose-of a demesth Yor mest

“Beven}. IN THE DETERMINATION OF COMPLIANCE WITH THE SOLVENCY REQUIREMENT, THE ASSETS,
. vetiigt ie 7
a Sil



EXCLUDED. Whenever the AFOREMENTIONED SOLVENCY REQUIREMENT [margin] be found to be

less than that herein required to be maintained, the Commissioner shall forthwith direct the
company to make good any such deficiency by cash, to be contributed by all stockholders of record
in proportion to their respective interest, and paid to the treasurer of the company, within fifteen
days from receipt of the order: Provided, That the company in the interim shail not be permitted to
take any new risk of any kind or character unless and until it make good any such deficiency:
Provided, further, That a stockholder who aside from paying the contribution due from him, pays the
contribution due from the another stockholder by reason of the failure or refusal of the latter to do
50, shall have a lien on the certificates of stock of the insurance company concermed appearing in its
‘books in the name of the defaulting stockholder on the date of default, as well as on any interest{s]
or dividendjs] that have accrued or will accrue to the said certificates of stock, until the
corresponding payment or reimbursement is made by the defaulting stockholder.”

SEC. 26. Section 195 of the insurance Code is hereby amended to read as follows:

“Sec. 195. No domestic insurance corporation shall declare or distribute any dividend on its
outstanding stocks except from profits attested in a sworn statement to the Commissioner by the
president or treasurer of the corporation to be remaining on hand after retaining unimpaired:

(a) The entire paid-up capital stock;

z ‘ .

[ée}} (b) In the case of life insurance corporation, the legal reserve fund required by section

two hundred eleven;

{{4}] (c) In the case of corporations other than life, the legal reserve fund required by section

two hundred thirteen;

fe} {d) A sum sufficient to pay all net losses reported, or in the course of settlement, and all

liabilities for expenses and taxes.

“Any dividend declared or distributed under the preceding paragraph shall be reported to
the Commissioner within thirty days after such declaration or distribution.

“if the Commissioner finds that any such corporation has deciared or distributed any such
dividend in violation of this section, he may order such corporation to cease and desist from doing

business until the amount of such dividend or the portion thereof in excess of the amount allowed

under this section has been restored to said corporatior

SEC. 27. Section 196 of the Insurance Code is hereby amended to read as follows:

u



“Sec. 196. In any determination of the financial condition of any insurance company doing

‘business in the Philippines, there shall be allowed and admitted as assets only such assets owned by
the insurance company concerned which consist of:

XXX
20. MUTUAL FUNDS, REAL ESTATE INVESTMENT TRUSTS, SALARY LOANS, UNIT

INVESTMENT TRUST FUNDS AND SPECIAL DEPOSIT ACCOUNTS, SUBJECT TO THE
CONDITIONS AS MAY BE PROVIDED FOR BY THE COMMISSIONER.
[20]11. Other assets, not inconsistent with the provisions of paragraphs 1 to {9} 10 hereof,
ner to be readily realizable and available for the

which are deemed by the Commi:
payment of losses and claims at values to be determined by him.”
SEC. 28. Section 198 of the Insurance Cade hereby amended to read as follows:
“Sec, 198, A LIFE INSURANCE COMPANY MAY LEND TO ANY OF ITS POLICYHOLDERS UPON
THE SECURITY OF THE VALUE OF ITS POLICY SUCH SUM AS MAY BE DETERMINED PURSUANT TO THE
PROVISIONS OF THE POLICY.
“No insurance company shall foan any of its money or deposits to any person, corporation or
‘association, except upon THE SECURITY OF ANY OF THE FOLLOWING: [first-mortgage-ordeeds of

deustel wabarad_impeowadon. d-real Tindluding-cond: > ae



b)

tf)

qa)

e)

8)

h)

FIRST MORTGAGE OR DEEDS OF TRUST OF REGISTERED, UNENCUMBERED, IMPROVED.
‘OR UNIMPROVED REAL ESTATE, INCLUDING CONDOMINIUMS, IN CITIES AND CENTERS
(OF POPULATION OF MUNICIPALITIES IN THE PHILIPPINES;

FIRST MORTGAGES OR DEEDS OF TRUST OF ACTUALLY CULTIVATED, IMPROVED AND
UNENCUMBERED AGRICULTURAL LANDS IN THE PHILIPPINES;

PURCHASE MONEY MORTGAGES, LEASE PURCHASE AGREEMENTS OR SIMILAR
SECURITIES EXECUTED OR RECEIVED BY IT ON ACCOUNT OF THE SALE OR EXCHANGE
OF REAL PROPERTY ACQUIRED PURSUANT TO SECTIONS TWO HUNDRED FOUR AND

‘TWO HUNDRED TW!
BONDS OR OTHER EVIDENCES OF INDEBTEDNESS ISSUED OR GUARANTEED BY THE

GOVERNMENT OF THE PHILIPPINES OR ITS POLITICAL SUBDIVISIONS AUTHORIZED BY
LAW TO INCUR SUCH OBLIGATIONS OR ISSUE SUCH GUARANTEES OR OF
GOVERNMENT-OWNED OR CONTROLLED CORPORATIONS AND INSTRUMENTALITIES
INCLUDING THE BANGKO SENTRAL NG PILIPINAS;

OBLIGATIONS ISSUED OR GUARANTEED BY UNIVERSAL BANKS, COMMERCIAL BANKS,
AND OFFSHORE BANKING UNITS, DULY REGISTERED WITH THE BANGKO SENTRAL NG
PILIPINAS;

OBLIGATIONS ISSUED OR GUARANTEED BY FOREIGN BANKS OR CORPORATIONS, EACH
OF WHICH SHALL HAVE TOTAL NET WORTH OF AT LEAST ONE BILLION UNITED STATES,
DOLLARS, AS SHOWN IN THEIR FINANCIAL STATEMENTS AS OF THE IMMEDIATELY
PRECEDING FISCAL YEAR;

ASSIGNMENTS OF MONETARY INSTRUMENTS SUCH AS CASH DEPOSITS, PROMISSORY
NOTES, DEPOSIT CERTIFICATES OR OTHER SIMILAR INSTRUMENTS OF UNIVERSAL
BANKS, COMMERCIAL BANKS, INVESTMENTS HOUSES OR OTHER FINANCIAL
INTERMEDIARIES DULY REGISTERED WITH THE BANGKO SENTRAL NG PILIPINAS;
PLEDGES OF SHARES OF STOCK, BONDS OR OTHER EVIDENCES OF INDEBTEDNESS

[SPECIFIED IN SECTION TWO HUNDRED; -



CHATTEL MORTGAGES OVER EQUIPMENT NOT MORE THAN THREE (3) YEARS OLD;

2 ‘AND

3 j) SUCH OTHER SECURITY AS MAY BE APPROVED BY THE COMMISSIONER.

4 “THE LOANS PROVIDED IN THE PRECEDING SUBSECTION SHALL BE SUBJECT TO THE

5 FOLLOWING CONDITIONS:

6 a) THE AMOUNT OF LOAN SECURED BY REAL ESTATE MORTGAGE OVER A NON-

7 AGRICULTURAL LAND SHALL NOT EXCEED SEVENTY PERCENT (70%) OF ITS APPRAISED

8 VALUE, AND IN THE CASE OF A LOAN SECURED BY A REAL ESTATE MORTGAGE OVER

9 AN AGRICULTURAL LAND, THE AMOUNT OF LOAN SHALL NOT EXCEED FORTY PER
10 CENT (40%) OF ITS MARKET VALUE: PROVIDED THAT, IN NO CASE SHALL SUCH LOAN
rn HAVE A MATURITY PERIOD IN EXCESS OF TWENTY YEARS;

2 b) UNLESS APPROVED BY THE COMMISSION, NO LOAN MAY BE GRANTED UPON THE
3 SECURITY OF A MORTGAGE ON IMPROVED REAL ESTATE IF THE IMPROVEMENTS
14 THEREON DO NOT BELONG TO THE OWNER OF THE LAND AND THE OWNER OF THE
15 IMPROVEMENTS DOES NOT SIGN THE DEED OF MORTGAGE. HOWEVER, IF THE
16 OWNER OF THE LAND 1S THE GOVERNMENT OF THE PHILIPPINES OR ANY OR ITS
17 POLITICAL SUBDIVISIONS AND A LONG TERM LEASE HAS BEEN EXECUTED IN FAVOR OF
18 THE OWNER OF THE IMPROVEMENTS, THE OWNER OF THE LAND NEED NOT BE A
19 PARTY TO THE DEED OF MORTGAGE. THE EXPIRATION DATE OF THE LEASE SHALL
20 NOT, HOWEVER, PRECEDE THE MATURITY OF THE LOAN. THE PHRASE “IMPROVED
2 REAL ESTATE” AS USED HEREIN SHALL MEAN LAND WITH PERMANENT BUILDING OR
22 BUILDINGS ERECTED THEREON;
23 ©) PURCHASE MONEY MORTGAGE, LEASE-AGREEMENTS OR SIMILAR SECURITIES
24 RECEIVED ON THE SALE OF REAL ESTATE PROPERTY SHALL NOT EXCEED ONE
25 HUNDRED PERCENT (100%) OF THE SELLING PRICE OF SAID PROPERTY, OR ONE
26 HUNDRED PER CENT (100%) OF ITS MARKET VALUE AT THE TIME OF ITS DISPOSITION,
27 WHICHEVER AMOUNT IS LOWER. HOWEVER, IN NO CASE SHALL SUCH MORTGAGE OR
28 AGREEMENT HAVE A MATURITY PERIOD OF TWENTY-FIVE YEARS;
29 ) LOANS SECURED BY SHARES OF STOCK OF SOLVENT CORPORATIONS SHALL NOT
30 EXCEED FIFTY PERCENT (50%) OF 1) THE WEIGHTED AVERAGE MARKET PRICE FOR THE
31 THIRTY {30} DAYS PRECEDING THE APPROVAL OF THE LOAN FOR SHARES LISTED IN
32 THE STOCK EXCHANGE; AND 2} THE BOOK VALUE GF SUCH SHARES FOR A LISTED
33 SHARES;
34 e):° LOANS SECURED BY THE CHATTEL MORTGAGES OVER EQUIPMENT SHALL NOT EXCEED
35, SEVENTY: IVE PERCENT (75%) (OF THE MARKET VALUE OF SAID EQUIPMENT.”

han eal Api se

14



Ro

Cr ee

10
BF
12
13
14
5
16
uv
18
19
20
2
22

SEC. 29. Section 199 of the Insurance Code hereby amended to read as follows:

“Sec. 199. No loan by any insurance company on the security of real estate shall be made

unless the title to such real estate shall have first been registered in accordance with the existing
Land Registration Act, [or-shal-be-2-titwle-reatduly-registared,] or [have] HAS been previously
registered under the provisions of the existing Mortgage Law AND THE LIEN OR INTEREST OF THE
INSURANCE COMPANY AS MORTGAGEE HAS BEEN REGISTERED.”

SEC. 30. Section 200 of the Insurance Code is hereby amended to read as follows:

“Sec. 200. (1) An insurance company may purchase, hold, own and convey such property,
real and personal, as may have been mortgaged, pledged, or conveyed to it in good faith in trust for
its benefit by reason of money foaned by it in pursuance of the regular business of the company, and
such real or personal property as may have been purchased by it at sales under pledges, mortgages
‘or deeds of trust for its benefit on account of money loaned by it; and such reat and personal
property as may have been conveyed to it by borrowers in satisfaction and discharge of loans made
by the company [to-them-Heavidedhowever—that-any_reaLestate_purchased by an_ insurance
company] in payment or by reason of any loan made by [i THE COMPANY IN PAYMENT OR BY

REASON OF ANY LOAN MADE BY IT shail be sold by the company within twenty years after the title
thereto has been vested in it.
(2) An insurance company may purchase, hold, own and convey real and personal property

as follows:
fa} The lot with building thereon in which the company conducts and carries on its

business,

(b} Bonds or other evidences of {delt] INDEBTEDNESS of the Government of the
Philippines or its political subdivisions authorized by law to Issue bonds at the
reasonable market value thereof.

(c) Bonds or other evidences of debt of the government-owned or controlled
corporations and entities, including the [Certeat—Bank] BANGKO SENTRAL NG
PILIPINAS.

{d) Bonds, debentures or other evidences of indebtedness of any solvent corporations] or
institution created or existing under the laws of the Philippines: Provided, however,

That the
defaulted in the payment of interest on any of its securities and that during each of

suing, assuming or guaranteeing entity or its predecessors shall not have

any three including the last two of the five fiscal years next preceding the date of
acquisition by such insurence camparry of such bonds, debentures, or other evidences

of indebtedness, the net earnings of the issuing, assuming or guaranteeing institution

oa available for its fixed charges, al hereinafter defined, shall have been not less than one
~ 4 ae eee .

~ ay



we

and one-quarter times the total of its fixed charges for such year; and Provided,

farther, That no life insurance company shall invest in of loan upon the obligations of
any one institution in the kinds permitted under this sub-section an amount in excess
of twenty-five per centum of the total admitted assets of such insurer as of December
thirty-first next preceding the date of such investment.

‘As used in this sub-section the term “net earnings available far fixed charges” shall
mean net income after deducting operating and maintenance expenses, taxes other
than income taxes, depreciation and depletion; but excluding extraordinary non-
recurring items of income or expense appearing in the reguler financial statement of
the issuing, assuming or guaranteeing institution. The ‘term "fixed charges” shall
clude interest on funded and unfunded debt, amortization of debt discount, and

rentals for leased properties.
Preferred or guaranteed stocks of any solvent corporation or institution created or

existing under the laws of the Philippines: Provided, [hewever,—Thatthe-issuing:

+the-date-oHavestment in-such preferred or guaranteed stock: Prowided, further) That

if the stocks are guaranteed, the amount of stocks so guaranteed is not excess of fifty

per centum of the amount of the preferred or common stocks, as the case may be, of
the guaranteeing corporation: and Provided, finally, That no life insurance company
shail invest in or loan upon obligations of any one institution in the kinds permitted
under this sub-section an amount in excess of ten per centum of the total admitted
assets of such insurer as of December thirty-first next preceding the date of such

investment.

Common stocks of any solvent corporation or institution created or existing under the

laws of the Philippines [upenwhich-regular-dividends—shall_ have_bees-paid-for the
three years next preceding the purchase of such steek]: Provided, however, That no life

insurance company shall invest in or joan upon the obligations of any one corporation
or institution in the kinds permitted under this sub-section an amount in excess of ten
per centum of the total admitted assets of such insurer as of December thirty-first
next preceding the date of such investment.

SECURITIES ISSUED BY A “REGISTERED ENTERPRISE”, AS THIS TERM IS DEFINED IN
REPUBLIC ACT NO, 5186, OTHERWISE KNOWN AS THE INVESTMENT INCENTIVES ACT,
AS AMENDED, PROVIDED THAT THE TOTAL INVESTMENT OF A DOMESTIC NON-LIFE

ANY REGISTERED ENTERPRISE SHALL NOT EXCEED TWENTY

INSURANCE COMPAN'



PERCENT {20%} OF THE NET WORTH OF SAID INSURANCE COMPANY AS SHOWN BY

(TS AFORESAID FINANCIAL STATEMENT UNLESS PREVIOUSLY AUTHORIZED BY THE

‘COMMISSIONER.

{gl(h) Certificates, notes and other obligations issued by the trustees or receivers of any
institution created or existing under the laws of the Philippines which, or the assets
of which, are being administered under the direction of any court: having jurisdiction;
Provided, however, That such certificates, notes or other obligations are adequately
secured as to principal and interests.

[kIi) equipment trust obligations or certificates which are adequately secured or other
part

adequately secured instruments evidencing an interest in equipment wholly or i
within the Philippines: Provided, however, That there is a right to receive determined
portions of rental, purchase or other fixed obligatory payments for the use or
purchase of such equipment.

4G) Any obligation of any corporation or institution created or existing under the laws of

‘the Philippines which is, on the date of acquisition by the insurer, adequately
secured and has qualities and characteristics wherein the speculative elements are
not predominant.

[iNk) SUCH OTHER SECURITIES AS MAY BE APPROVED BY THE COMMISSIONER.

"{3) Any domestic insurer which has outstanding insurance, annuity or reinsurance contracts
in currencies other than the national currency of the Philippines may invest in, or otherwise acquire
or loan upon securities and investments in such currency which are substantially of the same kinds,
classes and investment grades as those eligible for investment under the foregoing subdivisions of
this section; but the aggregate amount of such investment and of such cash in such curcency which is,
at anytime held by such insurer shali not exceed one and one-half times the amount of its reserves
‘and other obligations under such contracts or the amount which such insurer is required by the iaw
‘of any country or possession outside the Republic of the Philippines to be invest in such country or
possession, whichever shall be greater.”

SEC. 31. Section 201 of the insurance Code is hereby amended to read as follows:

“Sec. 201. An insurance company may (1) invest in equities of other financial institutions,
and {2) engage in the buying and selling of short-term debt instruments: Provided, That any or all of
such investments shall be with the prior approval of the Commissioner. INSURANCE COMPANIES:
MAY, HOWEVER, INVEST IN LISTED EQUITIES OF OTHER FINANCIAL INSTITUTIONS WITHOUT NEED
OF PRIOR APPROVAL BY THE COMMISSIONER.

SEC. 32 Section 202 of the Insurance Code is hereby amended to read as follows:

“Sec 202. Any life insurance company may:

Remaster oe e



ewe AHA ED

fa}

{b)

ny such project, may

Acquire or construct housing projects and, in connection with ai

acquire land or any interest therein by purchase, lease or otherwise, or use land
acquired pursuant to any other provision of this Code. Such company may thereafter
‘own, maintain, manage, collect or receive income from, or sell and convey, any land or
interest therein so acquired and any improvements thereon. The aggregate book value
of the investments of any such company in all such projects shall not exceed at the
time of such investments twenty-five per centum of the total admitted assets of such
company on the thirty-first day of December next preceding; PROVIDED, THAT THE
FUNDS OF THE COMPANY FOR THE PAYMENT OF PENDING CLAIMS AND OBLIGATIONS
‘SHALL NOT BE USED FOR SUCH INVESTMENTS;

Acquire reat property, other than property to be used primarily for providing housing:
and property for accommodation of its own business, as an investment for the
production of income, or may acquire real property to be improved or developed for
such investment purpose pursuant to a program therefor, subject to the condition
that the cost of each parcel of real property so acquired under the authority of this
paragraph (b}, including the estimated cost to the company of the improvement or
development thereof, when added to the book value of all other real property held by
[its] IT pursuant to this paragraph (b}, shall not exceed twenty-five per centum of its
admitted assets as of the thirty-first day of December next preceding.”

SEC. 33 Section 208 of the Insurance Cade is hereby amended to read as follows:
“Sec. 208. (1) All bonds or ather evidences of indebtedness having a fixed term and rate of

interest and held by any life insurance company authorized to do business in this country, if amply
secured and if not in default as to principal or interest, shall be valued [as-tellows: tf purshased-at

classes of secur

time of aequicition,] BASED ON THEIR AMORTIZED COST USING THE EFFECTIVE INTEREST METHOD
LESS IMPAIRMENT AND UNRECOVERABLE AMOUNT BASED ON APPROPRIATE MEASUREMENT
METHODS WHICH ARE GENERALLY ACCEPTED IN THE INDUSTRY AND ACCEPTED BY THE
COMMISSIONER. The Commissioner shall have the power to determine the eligibility of any such

investment(s} for valuation on the basis of amortization, and may by regulation prescribe or limit the

50 eligible for amortization. All bonds or other evidences of indebtedness which

in the judgment of the Commissioner are not amply secured shall not be eligible for amortization



Ne

CmeU AH eae

and shail be valued in accordance with paragraph two. The Commissioner may, if he finds that the

interest of policy holders so permit or require, by official regulation permit or require any class or
classes of insurers, other than life insurance companies, authorized to do business in this country, to
value their bonds or other evidences of indebtedness in accordance with the foregoing rule.

*(2) The investments of all insurers authorized to do business in this country, except
securities subject to amorti ion and except as otherwise provided in this chapter, shall be valued,
in the discretion of the Commissioner, at their market value [-er-at their appreisedvelue-or at prices
determined—byhim—as} AT THEIR AMORTIZED COST USING EFFECTIVE INTEREST METHOD LESS
IMPAIRMENT AND UNRECOVERABLE AMOUNT OR AT VALUATION representing their fair market

value. IF the Commissioner finds that in view of the character of investments of any insurer
authorized to do business in this country it would be prudent for such insurer to establish a special
reserve for possible losses or fluctuations in the values of its investments, he may require such
insurer to establish such reserve, reasonable in amount, AND INCLUDE A REPORT THEREON [and
sRay-require_that-such reserve be-maintained_and-reperted} in any statement or report of the
financial condition of such insurer. The Commissioner may, in connection with any examination or
required financial statement of an authorized insurer, require such insurer to furnish him complete
financial statements and audited report of the financial condition of any corporation of which the
securities are owned wholly or partly by such insurer and may cause an examination to be made of
any subsidiary or affiliate of such insurer AS APPROPRIATE TO SPECIFIC INVESTMENTS AS PROVIDED.
IN APPROPRIATE CIRCULARS ISSUED BY THE COMMISSIONER.

“{3) THE STOCK OF AN INSURANCE COMPANY SHALL BE VALUED AS FOLLOWS: A) LISTED
‘STOCKS SHALL BE VALUED AT MARKET VALUE AND PERIODICALLY ADJUSTED TO REFLECT MARKET
CHANGES THROUGH A SPECIAL VALUATION ACCOUNT TO REFLECT THEIR REALIZABLE VALUE
WHEN SOLD; B) UNLISTED STOCKS SHALL BE VALUED AT BOOK VALUE BASED ON THE LATEST
UNQUALIFIED AUDITED FINANCIAL STATEMENTS OF THE COMPANY WHICH ISSUED SUCH STOCKS;
AND C) STOCKS OF A CORPORATION UNDER THE CONTROL OF THE INSURER SHALL BE VALUED
USING THE EQUITY METHOD WHICH IS THE COST PLUS OR MINUS THE SHARE OF THE
CONTROLLING COMPANY IN THE EARNINGS OR LOSSES OF THE CONTROLLED COMPANY AFTER

ACQUISITION OF SUCH STOCKS.
{3} (4) The stock of an insurance company shall be valued at the lesser of its market vaiue

or its book value @s shown by its last approved [annual—statement] AUDITED FINANCIAL
STATEMENT or the last report on examination, whichever is more recent. The book value of a
share of common stock of an insurance company shall be ascertained by dividing (a) the amount of
its capital and surplus less the value of all of its preferred stock, if any, outstanding, by (b) the

‘number of shares of its common stock issued and outstanding.
i li tag sci AeA
0 RRS oe 19



Notwithstanding the foregoing provisions, an insurer may, at its option, value its holdings of stock

in a subsidiary insurance company in an amount not less than acquisition cost if such acquisition

before provided

costs less than the value determined as her

~{4) (5) Real estate required by foreclosure or by deed in jiew thereof, in the absence of 2

recent appraisal deemed by the Commissioner to be reliable, shall not be valued at an amount
greater than the unpaid principal of the defaulted loan at the date of such foreclosure or deed,
together with any taxes and expenses paid or incurred by such insurer at such time in connection
with such acquisition, and the cost of additions or impravements thereafter paid by such insurer
and any amount or amounts thereafter paid by such insurer on any assessments levied for
improvements in connection with the property.
[5] (6} Purchase money mortgages received on dispositions of real property held pursuant to
section two hundred two shall be valued in an amount equivalent to ninety per centum of the
value of such real property. Purchase money mortgages received on disposition of real property
otherwise held shall be valued in an amount not exceeding ninety per centum of the value of such
real property as determined by an appraisal made by an appraiser at or about the time of
disposition of such real property.

“{6](7) The stock of a subsidiary of an insurer shall be valued on the basis of the greater of
(i) the value of only such subsidiary of the assets of such subsidiary as would constitute lawful
investments for the insurer if acquired or held directly by the insurer or (ii) such other value
determined pursuant to standards and cumulative limitations, contained in a regulation to be
promulgated by the Commissioner.

“[3] (8) Notwithstanding any provision contained in this section or elsewhere in this
chapter, if the Commissioner find that the interests of policyholders so permit or require, he may
permit or require any class or classes of insurers authorized to do business in this country to value
their investments. or any class or classes thereof as of any date heretofore or hereafter in
accordance with any applicable valuation or method. *

SEC. 34. Section 210 of the Insurance Code is hereby amended to read as follows:

“See. 210. Every life insurance company, doing business in the Philippines, shall annually
make a valuation of all policies, additions thereto, unpaid dividends, and all other obligations
outstanding on the thirty-first day of December of the preceding year. All such valuations shall be
made [upen-the-net-premiums-basis,] according to the standard adopted by the company, AS
PRESCRIBED BY THE COMMISSIONER IN ACCORDANCE WITH INTERNATIONALLY ACCEPTED

ACTUARIAL STANDARDS, which standards shail be stated in its annual report.

“Such standard of valuation [whether cf the net-tevel_premium,full.preliminaryierm,-ony

s,} shall be according to @ standard



SS oma an eene

sc

table of mortality with interest at not more than six per centum compound interest. When the

is used, the term insurance shail be limited to the first policy year.
jissioner on or before the

preliminary term ba:
"The results of such valuations shall be reported to the Com
thirtieth day of April of each year accompanied by a swom statement of the company's actuary

certifying to the figures and stating upon what mortality table it is based, upon what rate of interest
the valuation is made, and the methods used in arriving at the resutt obtained.”

SEC. 35. Section 213 of the Insurance Code is hereby amended to read 2s follows:

“Sec. 213. Every insurance company, other than life, shall maintain a reserve for unearned
premiums on its policies in force, which shall be charged as a liability in any determination of its
financiat condition. Such reserve shall be fequalte-torty-per-coatum of the gross premiums, less
returns and cancellations, received on pol isks-having no’ har 1o- Fu, aN pO
fata on-all_gross-premiums-received-on-pelicies-or-risks-having-morethan-2-yeorte run: Arovded,
* F fe . . z
‘the_policies-upes-yearly-risks, and_the-full amount-of the pramiums_weitten- during the taste
months of she calendar year HLother marine risks-netter: .é:] CALCULATED BASED ON
‘THE TWENTY FOURTH (24) METHOD. *

SEC. 36. Section 215 of the insurance Code is hereby amended to read as follows:

“Sec. 215. No insurance company other than life, whether foreign or domestic, shall retain
any risk on any one subject of insurance in an amount exceeding twenty per centum of its net worth.
For purposes of this section, the term “subject of insurance” shalt include all properties or risks
insured by the same insurer thet customarily are considered by non-life company underwriters to be
subject to loss or damage from the same occurrence of any hazard insured against.

“Reinsurance ceded as authorized under the succeeding title shall be deducted in
determining the risk retained, As to surety risk, deduction shall also be made of the amount assumed

by any other company authorized to transact surety business and the value of any security

mortgage, pledged, or held subject to the surety's control and for the surety’s protection.

“THE COMMISSIONER MAY ISSUE REGULATIONS PROVIDING FOR A MAXIMUM LIMIT ON
THE OVER-ALL RETAINED RISKS OF INSURERS TO SERVE AS A CATASTROPHE LOSS LIMIT MEASURE,
AS WELL AS TO PRESCRIBE A MANDATORY CATASTROPHE COVER REQUIREMENT FOR THE SAME.”

SEC. 37. Section 220 of the Insurance Code is hereby amended to read as follows:

Sec. 220. Every insurance company authorized to do business in the Philippines shall report
to the Commissioner on forms prescribed by him the particulars of reinsurance treaties [esofthe
fi ‘ js thir ‘is
Foport-to-the-Commiccioner_particulars-of] OR any new treaties or changes in existing treaties

> WITHIN THREE (3) MONTHS FROM THEIR EFFECTIVITY”

TRB Str



SEC, 38. Section 225 of the Insurance Code is hereby amended to read as foltows:

“sec. 225, Within thirty days after [receiptof-the-annual-statement-approved-by the

Commissioner] THE APPROVAL OF THE BOARD OF DIRECTORS, every insurance company doing
pines shall publish in [awe] A newspaper[s] of general circulation fin-the-City-oF

business in the PI

\Manila,-one published in-Eaglish and-enein Pilipino, a-full sypnosis-of] its annual AUDITED financial

statement showing fully the conditions of its business, and setting forth its resources and liabilities
IN ACCORDANCE WITH SUCH FORM PRESCRIBED BY THE COMMISSIONER.”

SEC. 39. A new Section 225-A is hereby added in Title 8 of Chapter Il of the Code, as follows:

“SEC. 225-A. THE COMMISSIONER SHALL HAVE THE AUTHORITY TO MAKE, AMEND, AND
RESCIND SUCH ACCOUNTING RULES AND REGULATIONS AS MAY BE NECESSARY TO CARRY OUT THE
PROVISIONS OF THIS CODE, AND DEFINE ACCOUNTING, TECHNICAL AND TRADE TERMS USED IN THIS
CODE: PROVIDED THAT SUCH SHALL BE IN ACCORDANCE WITH INTERNATIONALLY ACCEPTED
ACCOUNTING STANDARDS. AMONG OTHER THINGS, THE COMMISSIONER MAY PRESCRIBE THE
FORM OR FORMS IN WHICH REQUIRED INFORMATION SHALL BE SET FORTH, THE ITEMS OR DETAILS
TO BE SHOWN IN THE BALANCE SHEET AND INCOME STATEMENT, AND THE METHODS TO BE
FOLLOWED IN THE PREPARATION OF ACCOUNTS, APPRAISAL OR VALUATION OF ASSETS AND
UABILITIES, DETERMINATION OF RECURRING AND NONRECURRING INCOME, DIFFERENTIATION OF
INVESTMENT AND OPERATING INCOME, AND IN THE PREPARATION, WHERE THE COMMISSIONER
DEEMS IT NECESSARY OR DESIRABLE, OF CONSOLIDATED BALANCE SHEETS OR INCOME ACCOUNTS
OF ANY PERSON DIRECTLY OR INDIRECTLY CONTROLLING OR CONTROLLED BY THE INSURANCE
COMPANY.”

SEC. 40. Paragraphs (g) and (}) of Section 228 of the Code are hereby amended as follows:

“Sec. 228. 0%

{g) A provision that the insurer will issue to the policyholder for delivery to each person
insured fonindividualcertificote_sevtingforth} 2 statement as to the insurance
protection to which he is entitled, to whom the insurance benefits are payable, and
the rights set forth in paragraphs (h), (i) and (j) following;

200

{i) A provision that if the group policy terminates or is amended so as to terminate the
insurance of any class of insured persons, every person insured thereunder at the date
of such termination whose insurance terminates and who has been so insured for five

years prior to such termination date shall be entitled to have issued to him by the
tations as set forth

Insurer an individyal policy of life insurance subject to the same

in paragraph (h), except that the group policy may provide that the amount of such

individual policy shall not exceed [the-smraller-of{3}) the amount of the person's life
; Bites <e-

onkgt a



insurance protection ceasing [less-the-amount-of any-life insurance tor-what-he-ts-oF

reinsurenwithin thirty days ater such-termt -and-{b}iwe-theusand- pesos};

yoo
SEC. 41, A new Section 244-A is hereby added in Title 11 of Chapter III of the Code, as

follows:
"SEC. 244-A. {T SHALL BE UNLAWFUL FOR ANY PERSON OR ENTITY TO KNOWINGLY

PRESENT OR CAUSE TO BE PRESENTED ANY FRAUDULENT CLAIM OR DOCUMENT FOR THE PAYMENT °
GF A LOSS UNDER A CONTRACT OF INSURANCE. ANY PERSON WHO VIOLATES THIS SECTION SHALL
BE HELD ABLE UNDER THE APPLICABLE PROVISIONS OF THE REVISED PENAL CODE.”

SEC. 42. A new Section 246-A is hereby added in Title 12 of Chapter Ili of the Code, as
follows:

“NO EXTERNAL AUDITOR OR AUDITING FIRM SHALL BE ENGAGED BY SUPERVISED PERSONS
OR ENTITIES UNLESS IT HAS BEEN ISSUED AN ACCREDITATION CERTIFICATE BY THE COMMISSIONER.
THE ACCREDITATION CERTIFICATE SHALL BE VALID UNTIL JUNE 30 OF THE THIRD YEAR FROM
ISSUANCE UNLESS IT IS REVOKED OR SUSPENDED. THE COMMISSIONER SHALL ISSUE RULES AND
REGULATIONS TO GOVERN THE ACCREDITATION OF THE EXTERNAL AUDITOR AND THE REVOCATION
‘OR SUSPENSION OF THE ACCREDITATION. *

SEC. 43. Section 248 of the Code is hereby amended by adding 2 new paragraph to read as
follows:

“NO INSURANCE COMPANY, LIFE OR NON-UFE, OR ANY PROFESSIONAL REINSURER,
ORDERED TO BE LIQUIDATED BY THE COMMISSIONER UNDER THE PROVISIONS HEREUNDER MAY BE
REHABILITATED OR AUTHORIZED TO TRANSACT A NEW, INSURANCE OR REINSURANCE BUSINESS, AS

‘THE CASE MAY SE.”
SEC. 44, Section 250 of the Insurance Code is hereby deleted.
“[Sec-2! case of liquidation of an-iasurance ny, after paymentefthe-costofthe

Courts ith thal ity"

SEC. 45. Paragraphs (4) and (8) of Section 271 of the Insurance Code are hereby amended
to read as follows:

"Sec. 271. 00

“(4) The presence in person or by proxy of five per cent of the members entitled to vote at
any meeting shall constitute @ quorum for the transaction of business, INCLUDING THE



1 AMENDMENT OF THE ARTICLES OF INCORPORATION AND/OR THE BY-LAWS unless otherwise

provided by the by-laws.
(5) Each such member shall have one vote at any meeting of members regardless of the

or the amount of insurance that such member holds and regardless of whether

number of poll
such poticies are policies of life insurance, or of health and accident insurance, or both. Any member

a written proxy executed by such person or his duly authorized agent and filed with the secretary of

such insurer.

2
3
4
5
6 entitled to vote shal! have the right to do so either in person or by an agent or agents authorized by
7
8
9 vox
0

“{8) alll insurers mutualized under the provisions of this chapter shall be subject to all other

11 applicable provisions of this Code [end-of the-Corporationtaw] . THE PROVISIONS OF THE
12 CORPORATION CODE SHALL APPLY IN A SUPPLETORY MANNER.”

13 SEC. 46. A new Section 272-A is hereby added in Titie 17 of Chapter itl of the Code, as
14 follows:
15 “SEC. 272-4. A DOMESTIC MUTUAL LIFE INSURANCE COMPANY DOING BUSINESS IN THE

16 PHILIPPINES MAY CONVERT ITSELF INTO AN INCORPORATED STOCK LIFE INSURANCE COMPANY BY
17 DEMUTUALIZATION. TO THAT END, IT MAY PROVIDE AND CARRY OUT A PLAN FOR THE CONVERSION
18 BY COMPLYING WITH THE REQUIREMENTS OF THIS TITLE.

19 “THE CONVERSION OF A DOMESTIC MUTUAL LIFE INSURANCE COMPANY TO AN
20 INCORPORATED STOCK LIFE INSURANCE COMPANY SHALL BE CARRIED OUT PURSUANT TO A
21 CONVERSION PLAN DULY APPROVED BY THE COMMISSIONER.

22 “THE COMMISSIONER SHALL PROMULGATE SUCH RULES AND REGULATIONS AS MAY BE
23 DEEMED NECESSARY TO CARRY OUT THE PROVISIONS OF THIS TITLE:

24 “ALL CONVERTED INSURERS UNDER THE PROVISIONS OF THIS TITLE SHALL BE SUBJECT TO
25 ALL OTHER APPLICABLE PROVISIONS OF THIS CODE. THE PROVISIONS OF THE CORPORATION CODE
26 — SHALL APPLY IN A SUPPLETORY MANNER.

7 SEC. 47. Section 274 of the Insurance Code is hereby amended to read as fallows:

28 ‘Sec. 274. The Commissioner shall publish the application for withdrawal [daily-ter-a-period
29 eFenaweekin-twe] ONCE A WEEK FOR THREE CONSECUTIVE WEEKS IN A newspaper|s] of general
30 circulation [in-the-City-of Manile-one in English_and-the-ather in filipine). The expenses of such
31... publication shall be paid by the insurance company filing such application.

32 SEC. 48. Section 280 of the Insurance Code hereby amended to read as follows:
association

it shall

“Sec. 280, Except as otherwise provided in this Code, no [perses; ] partners!

34 or corporation shall transact any business in the Philippines as a professional reinsurer ui

from the Commissioner upon the

have obtained a certificate of authority for that purpo:
nage end



eu we
Beg

bo

34

of the fees hereinafter prescribed, As used in this Code, the term “professional reinsurer” shall mean

any [persen,_partnership,association-o¢ comporation) ENTITY that transacts solely and exclusively

reinsurance business in the Phifippines.
“The Commissioner may refuse to issue a certificate of authority to any such [persen,

partnership, association-or corporation] ENTITY {if ia-his judgment} WHEN such refusal will best

promote public interest. No such certificate of authority shall be granted to any such [persan;

partnership, association er corporation] ENTITY unless and until the Commissioner {shall-heve] IS
satisfied [himself] by such examination [as-he-reay-make] and such evidence as [he] may BE

requireD that such [persen, partnership, association or corporation] ENTITY is qualified by the laws

of the Philippines to transact business therein as a professional reinsurer.

“Before issuing such certificate of authority, [ef] the Commissioner must be satisfied that the

name of the applicant is not that of any other known company transacting insurance or reinsurance

business in the Philippines, or a name so similar as to be calculated to mislead the public.

*[Such-certificate-oL authority shall-expire-on-the-iast day of June-oteach yearand-shal be

and_such-other_pertinent-taw,rules-ond-reguiations] SUCH CERTIFICATE OF AUTHORITY SHALL

EXPIRE ON THE LAST DAY OF JUNE THE THIRD YEAR FOLLOWING [TS ISSUANCE UNLESS IT IS

RENEWED.

“Every [such—person,—partnership—essaciation—or_corporation] ENTITY receiving such
certificate of authority shall be subject to the provisions of this Code and other related laws, and to
the jurisdiction and supervision of the Commissioner.” .

SEC. 49. Section 281 of the Insurance Code is hereby amended to read as follows:
d to transact

association or corporation authe

“Sec. 281. Any [person;] partners!
solely reinsurance business must have a [paid-up-capital-stoek] CAPITALIZATION of at least [ten
million -TWO BILLION pesos PAID IN CASH [ewenty-five-pereentum)of which AT LEAST FIFTY PER
CENT (50%) !S PAID-UP AND THE REMAINING PORTION THEREOF iS CONTRIBUTED SURPLUS, WHICH
IN _NO CASE SHALL BE LESS THAN FOUR HUNDRED MILLION PESOS OR SUCH CAPITALIZATION AS
MAY BE DETERMINED BY THE SECRETARY OF FINANCE, UPON THE RECOMMENDATION OF THE
COMMISSIONER; PROVIDED, THAT TWENTY-FIVE PER CENT (25%} OF THE PAID-UP CAPITAL must be
joner, consisting of bonds of other evidences of

invested in securities satisfactory to the Commi
debt of the Government of the Philippines or its political subdivisions or instrumentalities, or of
government-owned or controlled corporations and entities, including the [Gentrat_Bank-of-the

3_

BhilippinesJBANGKO SENTRAL NG PILIPINAS, and deposited with the Commissioner, and the
- PSRs Sala 8

Bae



remaining seventy-five per centum in such other securities as may be allowed and permitted by the

shall at all times be maintained free from any lien or encumbrant

Commissioner, which securi
Provided, THAT THE AFORESAID CAPITAL REQUIREMENT IS WITHOUT PREJUDICE TO OTHER

REQUIREMENTS TO BE IMPOSED UNDER ANY RISK-BASED CAPITAL METHOD THAT MAY BE ADOPTED
BY THE COMMISSIONER [That-reinsurers-already-doing-business-as-suich_in-the-Philippinesshall

not later than- December thirty-one; nineteen-hundred-eighty]: Provided, Further FINALLY, That the

provisions of this chapter applicable to insurance companies shall so far as practicable be likewise

applicable to professional reinsurers.”

SEC_ 50. Section 299 of the insurance Code is hereby amended to read as follows:
“Sec. 299. No insurance company doing business in the Philippines, nor any agent thereof,

shall pay any commission or other compensation to any person for services in obtaining insurance,
unless such persan shall have first procured from the Commissioner 2 license to act as an insurance

agent of such company of as an insurance broker as hereinafter provided.
“No person shall act as an insurance agent or as an insurance broker in the solicitation or
procurement of applications for insurance, or receive for services in obtaining insurance, any
commission or other compensation from any insurance company doing business in the Philippines,
or any agent thereof, without first procuring a license to act from the Commissioner, which must be
renewed [annually-on-the-tisst-day-of January, orwithinse-months] EVERY THREE (3) YEARS
thereafter. Such license shall be issued by the Commissioner only upon the written application of the
person desiring it, such application if for a license te act as insurance agent, being approved [and
countersigned} OR ENOORSED by the company such person desires to represent, and shall be upon 2
form prescribed by the Commissioner giving such information as he may require, and upon payment
of the corresponding fee hereinafter prescribed. The Commissioner shall satisfy himself as to
competence and trustworthiness of the applicant and shall have the right to refuse to issue or renew
and to suspend or revoke any such license in his discretion, [Ne-cuch-ticense shal be valid afterthe
huntiecs day of une of the year tallow! juance-uniess-teis renewed] THE LICENSE SHALE
EXPIRE AFTER THE THIRTIETH DAY OF JUNE OF THE THIRD YEAR FOLLOWING THE DATE OF ISSUANCE

UNLESS ST IS RENEWED.”
SEC. 51, Section 300 of the insurance Code is hereby amended to read as follows:
Sec. 300. Any person who for compensation solicits or obtains insurance on behalf of any

insurance company or transmits for 2 person other than himself an application for a policy or

contract of insurance to or from such company oF offers or assumes to act in the negotiating of such

insurance shall be an insurance agent within the infent of this section and shali thereby become



“AN INSURANCE AGENT IS AN INDEPENDENT CONTRACTOR AND NOT AN EMPLOYEE OF THE
ESENTED. “INSURANCE AGENT" INCLUDES AN AGENCY LEADER, AGENCY MANAGER,

COMPANY REPRi

OR THEIR EQUIVALENT.
“SINCE THE INSURANCE INDUSTRY IS IMBUED WITH PUBLIC INTEREST, THE INSURANCE

COMPANIES UPON APPROVAL OF THE COMMISSION MAY EXERCISE WIDE LATITUDE IN SUPERVISING
‘THE ACTIVITIES OF THEIR INSURANCE AGENTS TO ENSURE THE PROTECTION OF THE INSURING
PUBUC”

SEC. 52. Section 303 of the Insurance Code is hereby amended to read as follows:

“Sec. 303. The Commissioner shall, in order to determine the competence of every applicant

ta have the kind of license applied for, require such applicant to submit to a written examination and

to pass the same to the satisfaction of the Commissioner. [Such-examination shalt be-hele-at- such
times-and-places.as-the-Commissioner shall from time-to-time-determine] THE COMMISSIONER MAY

DELEGATE OR AUTHORIZE THE ADMINISTRATION OF THE EXAMINATION TO AN INDEPENDENT
ORGANIZATION, SUBJECT TO SUCH CONDITIONS THAT THE COMMISSIONER MAY PROVIDE.”

SEC. 53, Section 306 of the Insurance Code is hereby amended to read as follow:

“Sec. 306. The premium, or any portion thereof, which an insurance agent or insurance
broker collects from an insured and which is to be paid to an insurance company because of the
assumption of liability through the issuance of policies or contracts of insurance, shall be held by the
agent or broker in 2 fiduciary capacity and shall not be misappropriated or converted to his own use
or illegally withheld by the agent or broker.

“Any insurance company which delivers to an insurance agent or insurance broker @ policy
‘or contract of insurance shall be deemed to have authorized such agent or broker to receive on its
behalf payment of any premium which is due on such policy or contract of insurance at the time of
its issuance or delivery or which becomes due thereon.

“IN ORDER TO ENSURE FAITHFUL PERFORMANCE BY THE INSURANCE AGENT OR INSURANCE
BROKER OF THESE FIDUCIARY RESPONSIBILITIES, THE INSURANCE COMMISSIONER SHALL PRESCRIBE
THE MINIMUM TERMS AND CONDSTIONS ON SUCH MATTERS IN THE STANDARD AGENCY OR
BROKERS AGREEMENT BETWEEN THE AGENTS AND/OR THE BROKER WITH THE INSURANCE
COMPANIES.”

SEC. 54. Section 309 of the Insurance Code is hereby amended to read as follows:

“Sec. 309. Except as otherwise provided by law or treaty, it shall be unlawful for any person,

ippines, far himself or itself, or for some other

partnership, association or corporation in the PI
person, partnership, association of corporation, either to procure, receive or forward applications of

Insurance in, or to issue or to deliver or accept policies or contracts of insurance of or for, any

Insurance company or compani
vo: etre:
ae epany yet

authorized to transact business in the Philippines, covering
en SAR eo

ee

- SBR nr RE avec



1 risks, tife or nonlife, situated in the Philippines; and any such person, partnership, association or

~~ ‘Corporation violating the provisions of this section shall be deemed guitty of 2 penal offense, and
3 upon conviction thereof, shail for each such offense be punished by a fine of [tea]TWO HUNDRED
4 FIFTY thousand pesos, or imprisonment of six months, or both at the discretion of the court:
5 Provided, That the provisions of this section shall nat apply to reinsurance.”
6 SEC. 55, Section 315 of the Insurance Code hereby amended to read as follows:
7 “Sec. 315. The application for a certificate of registration as resident agent filed with the
8 Commissioner must be accompanied with [:} {a} a copy of the power of attorney, duly notarized and
9 authenticated by the Philippine Consul in the place where such foreign insurer or broker is
10 domiciled, empowering the applicant to act as resident agent and to receive notices, summons and

11 legat processes for and in behat of such foreign insurer or broker in connection with any action or

12 legal proceeding against such foreign insurer or broker [and {b}-a-copy-of the_corresponding

4
15 SEC. 56. Section 317 of the Insurance Code hereby amended to read as foliows:
16 “Sec. 317. A certificate of registration issued to a resident agent shall expire on the thirtieth

17 dayofJune of the THIRD year following its issuance unless it Is renewed.
18 “The Commissioner may, after due notice and hearing, recall or cancet the certificate of

ion of any existing law, rule or regulation, or any

19 registration issued to a resident agent for viol

20 provision of this Code.”

21 SEC. 57. Section 322 of the Insurance Code hereby amended to read as follows:

2 “See. 322. No certificate of registration issued to an underwriter shall be valid after the
23 thirtieth day of June of the THIRD year following its issuance unless it is renewed.

24 The Commissioner may, after due notice and hearing, also suspend or cancel such certificate
25 far violation of existing laws, rules and regulations or of any provisions of this Code.”

26 SEC_ 58. Section 328 of the Insurance Code is hereby amended to read as follows:

27 “Sec. 328. [Every] ANY adjuster's license issued hereunder shall be valid until after the
28 thirtieth day of June of the THIRD year following the issuance of such license unless it is renewed.”
29 SEC. 59, Section 336 of the Insurance Code hereby amended to read as follows:

30 “sec. 336. Any person may be officially accredited by the Commissioner to act as [any] AN

31 ‘actuary in any life insurance company or in any mutual benefit association authorized to do business
32. in the Philippines upon zpplication therefor and the payment of the corresponding fee hereinafter
33 prescribed: Provided, That: (1) he is a feliow of good standing of the Actuarial Society of the

34 Philippines at the time of his appointment and remains in such good standing during the tenure of

in the ease of one who is nat a fellow of the ‘Acturial Society of the

Se a ee

. - .¥

. 2g «| SBS ees



rey

Svraunuanu

Society, and has been given permission by the pertinent government authorities in the Philippir

render services in the Philippines, in the event that he is not a citizen of the Philippines.

“THE REGISTRATION OF THE ACTUARY SHALL BE SUSPENDED OR REVOKED BY THE
COMMISSIONER ON THE FOLLOWING GROUNDS:

a) FAILURE TO ADEQUATELY PERFORM REQUIRED FUNCTIONS AND DUTIES UNDER THIS
CODE;

b) FAILURE TO DISCLOSE CONFLICT OF INTEREST;

©) FAILURE TO COMPLY WITH THE CODE OF CONDUCT OF THE ACTUARIAL SOCIETY OF THE

PHILIPPINES; OR

d) SUCH OTHER GROUNDS THAT MAY BE DETERMINED BY THE COMMISSIONER.

“NO ACTUARY ENGAGED BY A LIFE INSURANCE COMPANY SHALL BE AT THE SAME TIME A
STOCKHOLDER OR A DIRECTOR OF THE BOARD, CHIEF EXECUTIVE OFFICER OR CHIEF FINANCIAL
OFFICER OF THE COMPANY OR HOLD ANY POSITION THAT THE COMMISSIONER MAY DETERMINE
‘JO HAVE AN INHERENT CONFLICT OF INTEREST TO THE POSITION OF AN ACTUARY

“No certificate of registration issued under this title shall be valid after the thirtieth day of
June of the THIRD year following its issuance unless it is renewed. *

SEC. 60. Anew Title 6-A on EXTERNAL AUDITORS and a new Section 338-A are hereby added
Chapter IV of the Code, to read as follows:
“EXTERNAL AUDITORS
Sec. 338-A. NO EXTERNAL AUDITOR SHALL BE ENGAGED BY, SUPERVISED PERSONS OR

ENTITIES UNLESS (T HAS BEEN ISSUED AN ACCREDITATION CERTIFICATE BY THE COMMISSIONER. THE
ACCREDITATION CERTIFICATE SHALL 8E VALID UNTIL JUNE 30 OF THE THIRD YEAR FROM ISSUANCE
UNLESS IT IS REVOKED OR SUSPENDED. THE COMMISSIONER SHAUL ISSUE RULES AND
REGULATIONS TO GOVERN THE ACCREDITATION OF THE EXTERNAL AUDITOR AND THE REVOCATION
OR SUSPENSION OF THE ACCREDITATION.”

SEC. 61. Section 363 of the Insurance Code is hereby amended to read as follows:

Sec. 363. If the Commissioner, after notice and hearing, finds that any insurance company,
rating organization, agent, broker or other person has violated any of the provisions of this title, it
shall order the payment of a fine not to exceed [five-hundted} TWENTY FIVE THOUSAND pesos for
each such offense, and shait immediately SUSPEND OR revoke the license issued to such insurance

company, rating organization, agent, or broker. The issuance, procurement or negotiation of a single

poticy of contract of insurance shall be deemed a separate offense.”
SEC. 62. A new Section 364-A is hereby added in Title & of-Chapter IV of the Code, as

35.

Boers F

Follows

‘ adic:



er are arr

“SEC. 364-A. THE COMMISSIONER, IN CONSULTATION WITH THE DULY ACCREDITED
ASSOCIATIONS REPRESENTING THE INSURANCE INDUSTRY, SHALL ADOPT AND PROMULGATE A
CODE OF CONDUCT TO PROMOTE INTEGRITY, HONESTY AND ETHICAL BUSINESS PRACTICES AMONG
INSURANCE AGENTS, DISTRIBUTORS AND OTHER INTERMEDIARIES.”

SEC. 63. Anew Title 9 on BANCASSURANCE and Sections 364-8 to 364-D are hereby added
in Chapter IV of the Code, to read as fellows:

“ITE
“BANCASSURANCE

“SEC. 364-B. THE TERM “BANCASSURANCE™ SHALL MEAN THE PRESENTATION AND SALE TO
BANK CUSTOMERS BY AN INSURANCE COMPANY OF ITS INSURANCE PRODUCTS WITHIN OR OUTSIDE
‘THE PREMISES OF THE HEAD OFFICE OF SUCH BANK DULY UCENSED BY THE BANGKO SENTRAL NG
PIUPINAS OR ANY OF 1TS BRANCHES UNDER SUCH RULES AND REGULATIONS WHICH THE
COMMISSIONER MAY PROMULGATE. TO ENGAGE IN BANCASSURANCE, THE BANK |S NOT
REQUIRED TO HAVE EQUITY OWNERSHIP OF THE INSURANCE COMPANY. NO INSURANCE COMPANY
SHALL ENGAGE IN THE BUSINESS OF BANCASSURANCE UNLESS IT POSSESSES ALL THE
REQUIREMENTS AS MAY BE PRESCRIBED BY THE COMMISSIONER.

“NO INSURANCE PRODUCT UNDER THIS SECTION, WHETHER LIFE OR NON-LFE, SHALL BE
ISSUED OR DELIVERED UNLESS IN THE FORM PREVIOUSLY APPROVED BY THE COMMISSIONER.

“SEC. 364-C. PERSONNEL TASKED TO PRESENT AND SELL INSURANCE PRODUCTS WITHIN
THE BANK PREMISES SHALL BE DULY LICENSED BY THE COMMISSIONER AND SHALL BE SUBJECT TO
THE RULES AND REGULATIONS OF THIS ACT.

“SEC. 364-D. THE COMMISSIONER, IN COORDINATION WITH THE BANGKO SENTRAL NG
PILIPINAS, SHALL PROMULGATE RULES AND REGULATIONS TO EFFECTIVELY SUPERVISE THE
BUSINESS OF BANCASSURANCE.”

SEC. 64. Section 391 of the Insurance Code is hereby amended to read as follows:

“Sec. 391. A mutual benefit association, before it may transact as such, must first secure 2
license from the Commissioner. The application for such license shall be filed with the Commissioner
together with certified true copies of the articles of incorporation or the constitution and by-laws of
the association, and all amendments thereto, and such other documents or testimonies as the

Commissioner may require.
“No license shall be granted to a mutual benefit association until the Commissioner shall

have been satisfied by such examination as may make and such evidence as he may require that the
association is qualified under existing laws to operate and transact business as such. The

Commissioner may refuse to issue a license to any mutual benefit association if, in his judgment,

“Such refusal will best promote the interest of the members of such association and of the people of



wah ke

34

Fe

this country. Any license issued shall expire on the last day of June of the THIRD year following its

issuance and, upon proper application, may may be renewed if the association is continuing to compl
with existing laws, rules and regulations, orders, instructions, rulings and decisions of the
‘Commissioner. Every association receiving any such license shall be subject to the supervision of the

Commissioner: Provided, That no such license shall be granted to any such association if such

association has no actuary.

-reutual benefit associations |”
SEC. 65. Section 408 of the Insurance Code is hereby amended to read as follows:

“Sec. 408. To secure the enforcement of any provision under this Title, the Commissioner
may issue such rules, rulings, instructions, orders and circulars [subject-to-the-oppreval of the
Seccetaryof Finance].

SEC. 66. Section 408 of the Insurance Code is hereby amended to read as follows:

“Sec. 413. All trustees shall, before entering in the performance of the duties of their trust,
‘obtain a certificate of registration from the Commissioner. THE REGISTRATION SHALL EXPIRE ON
JUNE 30 OF THE THIRD YEAR FOLLOWING {TS ISSUANCE UNLESS IT 1S RENEWED.

fe i ‘i a

- j i js }

All provisions of this Code governing mutual benefit associations and such other provisions
herein, whenever practicable and necessary, shall be applicable to trusts for charitable uses.”

SEC. 67. A new Section 413-A is hereby added in Title 2 of Chapter Vil of the Code, as
follows:

“SEC. 413-A. THE TREASURER OF A CHARITABLE TRUST SHALL FILE A FIDELITY BOND IN THE
AMOUNT COMMENSURATE WITH THE VALUE OF THE TRUST PROPERTY IN HIS CUSTODY, AS MAY BE
DETERMINED BY THE COMMISSIONER.”

Sec. 68. A new Chapter VILA on Trust Business in General and Sections 413-8 to 423-£ are
hereby added to the Code to read as follows:

“CHAPTER VILA
TRUST BUSINESS IN GENERAL

“SEC. 413-B. A LIFE INSURANCE COMPANY DULY AUTHORIZED BY THE COMMISSIONER. MAY

ENGAGE IN TRUST BUSINESS, PROVIDED THAT THE SAME SHALL BE RELATED TO, INHERENT IN OR IN

5,”_FURTHERANCE OF (TS INSURANCE BUSINESS. SUCH TRUST BUSINESS SHALL INCLUDE BUT NOT BE



Rw

oUr Annee

UMITED TO THE MANAGEMENT AND CUSTODY OF RETIREMENT FUNDS UNDER REPUBLIC ACT NO.
4917, ESCROW FUNDS, PRE-NEED FUNDS, PERSONAL EQUITY AND RETIREMENT ACCOUNT (PERA)
FUNDS, AND SUCH OTHER ASSETS AS MAY BE PRESCRIBED BY THE INSURANCE COMMISSION

“OTHER TRUST BUSINESSES NOT OTHERWISE #NCLUDED IN THE FOREGOING PARAGRAPH
MAY BE PURSUED BY THE INSURANCE COMPANY PROVIDED A LICENSE TO THAT EFFECT WILL BE
SECURED FROM THE BANGKO SENTRAL NG PILIPINAS.

“ASSETS UNDER TRUST MANAGEMENT SHALL REPRESENT ALL FUNDS, PROPERTIES AND
SECURITIES WHICH, THE INSURANCE COMPANY ACTING AS TRUSTEE, SHALL MANAGE, ADMINISTER,
HOLD AND TAKE CUSTODY FOR THE BENEFIT OF OTHERS. IN THE PERFORMANCE OF ITS TRUST
BUSINESS, SUCH ASSETS SHALL BE KEPT SEPARATE AND DISTINCT FROM THE GENERAL BUSINESS OF
THE INSURANCE COMPANY.

“THE INVESTMENT OF FUNDS HELD IN TRUST BY THE INSURANCE COMPANIES UNDER THIS
SECTION SHALL BE SUBJECT TO THE SAME REQUIREMENTS APPLICABLE TO THE INVESTMENT OF THE
ASSETS OF UFE INSURANCE COMPANIES, AS PROVIDED FOR UNDER THIS CODE.

“THE COMMISSIONER SHALL PROMULGATE SUCH RULES AND REGULATIONS AS MAY BE
NECESSARY TO REGULATE THE CONDUCT OF TRUST BUSINESS BY INSURANCE COMPANIES.

“SEC. 413-C. A TRUST ENTITY SHALL ADMINISTER PROPERTY UNDER ITS CUSTODY WITH THE
DILIGENCE THAT A PRUDENT MAN WOULD EXERCISE IN THE CONDUCT OF AN ENTERPRISE OF A LIKE
CHARACTER AND WITH SIMILAR AIMS. NO TRUST ENTITY SHALL, FOR THE ACCOUNT OF THE
TRUSTOR OR THE BENEFICIARY OF THE TRUST, PURCHASE OR ACQUIRE PROPERTY FROM, OR SELL,
TRANSFER, ASSIGN OR LEND MONEY OR PROPERTY TO, OR PURCHASE DEBT INSTRUMENTS OF ANY
OF THE DEPARTMENTS, DIRECTORS, OFFICERS, STOCKHOLDERS, OR EMPLOYEES OF THE TRUST
ENTITY, RELATIVES WITHIN THE FIRST DEGREE OF CONSANGUINITY OR AFFINITY, OR THE RELATED
INTERESTS, OF SUCH DIRECTORS, OFFICERS AND STOCKHOLDERS, UNLESS PRIOR TO THE
TRANSACTION, SUCH TRANSACTION IS SPECIFICALLY AUTHORIZED BY THE TRUSTOR AND THE
RELATIONSHIP BETWEEN THE TRUSTEE AND THE OTHER PARTY INVOLVED IN THE TRANSACTION |S
FULLY DISCLOSED TO THE TRUSTOR OR BENEFICIARY OF THE TRUST. THE INSURANCE COMMISSION
SHALL PROMULGATE SUCH RULES AND REGULATIONS AS MAY BE NECESSARY TO REGULATE THE
CONDUCT OF TRUST BUSINESS BY INSURANCE COMPANIES.

“SEC. 413-D. THE TRUST BUSINESS AND ALL FUNDS, PROPERTIES OR SECURITIES RECEIVED
BY ANY TRUST ENTITY AS EXECUTOR, ADMINISTRATOR, TRUSTEE, RECEIVER, OR DEPOSITARY SHALL
BE KEPT SEPARATE AND DISTINCT FROM THE GENERAL BUSINESS OF THE INSURANCE COMPANY, OR
ALLIED INSURANCE COMPANY INCLUDING ALL OTHER FUNDS, PROPERTIES, AND ASSETS OF SUCH
TRUST ENTITY. THE ACCOUNTS OF ALL SUCH FUNDS, PROPERTIES, OR SECURITIES SHALL LIKEWISE



1 BE KEPT SEPARATE AND DISTINCT FROM THE ACCOUNTS OF THE GENERAL BUSINESS OF THE TRUST

Tenn:
3 “SEC. 413-£, NO ASSETS HELD BY A TRUST ENTITY IN ITS CAPACITY AS TRUSTEE SHALL BE
4) SUBJECT TO ANY CLAIM OTHER THAN THOSE OF THE PARTIES INTERESTED IN THE SPECIFIC TRUSTS.”
5 SEC. 69. A new Chapter VII-B on REGISTRATION, RESPONSIBILITIES AND OVERSIGHT OF SELF-
6 _ REGULATORY ORGANIZATIONS and Sections 413-F to 413-K are hereby added to the Code to read as
7
8 “CHAPTER VIL-B
9 REGISTRATION, RESPONSIBILITIES AND OVERSIGHT OF SELF-REGULATORY ORGANIZATIONS:
10 “SEC. 413-F. THE COMMISSIONER SHALL HAVE THE POWER TO REGISTER AS A SELF-

1] REGULATORY ORGANIZATION, OR OTHERWISE GRANT LICENSES, AND TO REGULATE, SUPERVISE,
12 EXAMINE, SUSPEND OR OTHERWISE DISCONTINUE, AS A CONDITION FOR THE OPERATION OF
13 ORGANIZATIONS WHOSE OPERATIONS ARE RELATED TO OR CONNECTED WITH THE INSURANCE
14 MARKET SUCH AS BUT NOT LIMITED TO ASSOCIATIONS OF INSURANCE COMPANIES, WHETHER LIFE
15 OR NON-UFE, REINSURERS, ACTUARIES, AGENTS, BROKERS, DEALERS, MUTUAL BENEFIT
16 ASSOCIATIONS, TRUSTS, RATING AGENCIES, AND OTHER PERSONS REGULATED BY THE
17 COMMISSIONER, WHICH ARE ENGAGED IN THE BUSINESS REGULATED BY THIS CODE.

18 “THE COMMISSIONER MAY PRESCRIBE RULES AND REGULATIONS WHICH ARE NECESSARY
19 OR APPROPRIATE IN THE PUBLIC INTEREST OR FOR THE PROTECTION OF INVESTORS TO GOVERN
20 SELF-REGULATORY ORGANIZATIONS AND OTHER ORGANIZATIONS LICENSED OR REGULATED
21. PURSUANT TO THE AUTHORITY GRANTED HEREUNDER, INCLUDING BUT NOT LIMITED TO THE
22 REQUIREMENT OF COOPERATION WITHIN AND AMONG ALL PARTICIPANTS IN THE INSURANCE

23. MARKET TO ENSURE TRANSPARENCY AND FACILITATE EXCHANGE OF INFORMATION.

24 “SEC. 413-G. AN ASSOCIATION CANNOT BE REGISTERED AS A SELF-REGULATORY
25 GRGANIZATION UNLESS THE COMMISSIONER DETERMINES THAT:

26 a) THE ASSOCIATION IS SO ORGANIZED AND HAS THE CAPACITY TO BE ABLE TO CARRY
27 OUT THE PURPOSES OF THIS CODE AND TO COMPLY WITH, AND TO ENFORCE
28 COMPLIANCE BY ITS MEMBERS AND PERSONS ASSOCIATED WITH ITS MEMBERS, WITH
29 THE PROVISIONS OF THIS CODE, THE RULES AND REGULATIONS THEREUNDER, AND
30 ‘THE RULES OF THE ASSOCIATION.

31 b) THE RULES OF THE ASSOCIATION, NOTWITHSTANDING ANYTHING IN THE
32 CORPORATION CODE TO THE CONTRARY, PROVIDE THE FOLLOWING:

fi) QUALIFICATIONS AND. THE DISQUALIFICATIONS ON MEMBERSHIP OF THE
34 ASSOCIATION;

w@
Bo



(li) A FAIR REPRESENTATION OF ITS MEMBERS TO SERVE ON THE BOARD OF DIRECTORS

OF THE ASSOCIATION AND IN THE ADMINISTRATION OF ITS AFFAIRS, AND THAT ANY

NATURAL PERSON ASSGCIATED WITH A JURIDICAL ENTITY THAT IS A MEMBER SHALL

ALSO BE DEEMED TO BE A MEMBER FOR THIS PURPOSE;
‘THE PRESIDENT OF THE ASSOCIATION AND AT LEAST 2 INDEPENDENT DIRECTORS AS

MEMBERS THE BOARD OF DIRECTORS OF THE ASSOCIATION ;

(fv) EQUITABLE ALLOCATION OF REASONABLE DUES, FEES, AND OTHER CHARGES
AMONG MEMBERS AND OTHER PERSONS USING ANY FACILITY OR SYSTEM WHICH
THE ASSOCIATION OPERATES OR CONTROLS;

fv) TO PROTECT THE INSURING PUBLIC, THE PREVENTION OF FRAUDULENT AND
MANIPULATIVE ACTS AND PRACTICES TO PROTECT THE INSURING PUBLIC AND THE
PROMOTION OF JUST AND EQUITABLE PRINCIPLES OF BUSINESS;

{vi IMEMBERS AND PERSONS ASSOCIATED WITH ITS MEMBERS SUBJECT TO DISCIPLINE
FOR VIOLATION OF ANY PROVISION OF THIS CODE, THE RULES OR REGULATIONS
‘THEREUNDER, OR THE RULES OF THE ASSOCIATION;

{vil)FAIR PROCEDURE FOR THE DISCIPLINING OF MEMBERS AND PERSONS ASSOCIATED
WITH MEMBERS;

(vii) THE PROHIBITION OR LIMITATION OF ACCESS TO SERVICES OFFERED BY THE
ASSOCIATION OR A MEMBER THEREOF.

“SEC. A13-+H. A SELF-REGULATORY ORGANIZATION MAY EXAMINE AND VERIFY THE
QUALIFICATIONS OF AN APPLICANT TO BECOME A MEMBER IN ACCORDANCE WITH PROCEDURES
ESTABLISHED BY THE RULES OF THE ASSOCIATION.

“A SELF-REGULATORY ORGANIZATION SHALL DENY MEMBERSHIP OR CONDITION THE
MEMBERSHIP OF AN ENTITY, IF IT DOES NOT MEET THE STANDARDS OF FINANCIAL RESPONSIBILITY,
OPERATIONAL CAPABILITY, TRAINING, EXPERIENCE, OR COMPETENCE THAT ARE PRESCRIBED BY THE
RULES OF THE ASSOCIATION; OR HAS ENGAGED, AND THERE IS A REASONABLE LIKELIHOOD IT WILL
AGAIN ENGAGE, !N ACTS OR PRACTICES INCONSISTENT WITH JUST AND EQUITABLE PRINCIPLES OF
FAIR TRADE.

“A. SELF-REGULATORY ORGANIZATION MAY DENY MEMBERSHIP TO AN ENTITY NOT
ENGAGED IN A TYPE OF BUSINESS IN WHICH THE RULES OF THE ASSOCIATION REQUIRE MEMBERS
TO BE ENGAGED. .

“SEC 413-1. UPON THE FILING OF AN APPLICATION FOR REGISTRATION AS A SELF
REGULATORY ORGANIZATION UNDER THIS TITLE, THE COMMISSIONER SHALL HAVE NINETY (90)
_DAYS WITHIN WHICH TO EITHER GRANT REGISTRATION GR INSTITUTE A PROCEEDING TO

eee Te ETRE REGISTINTION SHOUT DENTED._1N-THE EVENT PROCEEDINGS ARE

Ei .



ww Ww
oe 2

g

ITY (270) DAYS WITHIN WHICH

INSTITUTED, THE COMMISSIONER SHALL HAVE TWO HUNDRED SEVEN
TO CONCLUDE SUCH PROCEEDINGS AT WHICH TIME IT SHALL, BY ORDER, GRANT.OR DENY SUCH

REGISTRATION.
“SEC. 413-J, EVERY SELF-REGULATORY ORGANIZATION SHALL COMPLY WITH THE

PROVISIONS OF THIS CODE, THE RULES AND REGULATIONS THEREUNDER, AND ITS OWN RULES, AND
ENFORCE COMPLIANCE THEREWITH BY ITS MEMBERS, PERSONS ASSOCIATED WITH ITS MEMBERS
OR ITS PARTICIPANTS, NOTWITHSTANDING ANY PROVISION OF THE CORPORATION CODE TO THE
CONTRARY.

“SEC. 413-K. EACH SELF-REGULATORY ORGANIZATION SHALL SUBMIT TO THE
COMMISSIONER FOR PRIOR APPROVAL ANY PROPOSED RULE OR AMENDMENT THERETO,
TOGETHER WITH A CONCISE STATEMENT OF THE REASON AND EFFECT OF THE PROPOSED
AMENDMENT.

“WITHIN. SIXTY (60) DAYS AFTER SUBMISSION OF A PROPOSED AMENDMENT, THE
COMMISSIONER SHALL, BY ORDER, APPROVE THE PROPOSED AMENDMENT. OTHERWISE, THE SAME
MAY BE MADE EFFECTIVE BY THE SELF-REGULATORY ORGANIZATION.

“IN THE EVENT OF AN EMERGENCY REQUIRING ACTION FOR THE PROTECTION OF THE
INSURING PUBLIC, A SELF-REGULATORY ORGANIZATION MAY PUT A PROPOSED AMENDMENT INTO
EFFECT SUMMARILY: PROVIDED, HOWEVER, THAT A COPY OF THE SAME SHALL BE IMMEDIATELY
SUBMITTED TO THE COMMISSIONER.

“THE COMMISSIONER IS FURTHER AUTHORIZED, IF AFTER MAKING APPROPRIATE REQUEST
IN WRITING TO A SELF-REGULATORY ORGANIZATION THAT SUCH ORGANIZATION EFFECT ON ITS
OWN BEHALF SPECIFIED CHANGES IN ITS RULES AND PRACTICES AND, AFTER DUE NOTICE AND
HEARING IT DETERMINES THAT SUCH CHANGES HAVE NOT BEEN EFFECTED, AND THAT SUCH
CHANGES ARE NECESSARY, BY RULE OR REGULATION OR BY ORDER, MAY ALTER, ABROGATE OR
SUPPLEMENT THE RULES OF SUCH SELF-REGULATORY ORGANIZATION IN SO FAR AS NECESSARY OR
APPROPRIATE TO EFFECT SUCH CHANGES IN RESPECT OF SUCH MATTERS AS:

a} SAFEGUARDS IN RESPECT OF THE FINANCIAL RESPONSIBILITY OF MEMBERS AND
ADEQUATE PROVISION AGAINST THE EVASION OF FINANCIAL RESPONSIBILITY
THROUGH THE USE OF CORPORATE FORMS OR SPECIAL PARTNERSHIPS;

b) THE SUPERVISION OF MARKET PRACTICES;

c) THE MANNER, METHOD, AND PLACE OF SOLICITING BUSINESS;

d) THE FIXING OF REASONABLE RATES OF FEES, INTEREST, LISTING AND OTHER CHARGES,
‘BUT NOT RATES OF COMMISSION; AND SELF-REGULATORY ORGANIZATION

e) THE SUPERVISION, AUDITING AND DISCIPLINING OF MEMBERS,



-2— UNDER SUPERVISION, THE COMMISSIONER, AFTER DUE-NOTICE ANI

3
4
5
6
7
8
9

10
u
12
13
14
iby
16
17
18
19
20
21
22
23
24
25
26
27

“IN ADDITION TO THE GENERAL POWERS OF THE COMMISSIONER OVER THE ENTITIES
D HEARING, 18 AUTHORIZED, IN

‘THE PUBLIC INTEREST AND TO PROTECT THE INSURING PUBLIC:
2) TO SUSPEND FOR A PERIOD NOT EXCEEDING TWELVE (12) MONTHS OR TO REVOKE
THE REGISTRATION OF A SELF-REGULATORY ORGANIZATION, OR TO CENSURE OR
IMPOSE LIMITATIONS ON THE ACTIVITIES, FUNCTIONS, AND OPERATIONS OF SUCH
SELF-REGULATORY ORGANIZATION, IF THE COMMISSION FINDS THAT SUCH A SELF-
REGULATORY ORGANIZATION HAS WILLFULLY VIOLATED OR IS UNABLE TO COMPLY
WITH ANY PROVISION OF THIS CODE OR OF THE RULES AND REGULATIONS
THEREUNDER, OR ITS OWN RULES, OR HAS FAILED TO ENFORCE COMPLIANCE
THEREWITH BY A MEMBER OF, PERSON ASSOCIATED WiTH A MEMBER, OR A
PARTICIPANT IN SUCH SELF-REGULATORY ORGANIZATION;
b) TO EXPEL FROM A SELF-REGULATORY ORGANIZATION ANY MEMBER THEREOF OR ANY
PARTICIPANT THEREIN WHO IS FOUND TO HAVE WILLFULLY VIOLATED ANY PROVISION
OF THIS CODE OR SUSPEND FOR A PERIOD NOT EXCEEDING TWELVE (12) MONTHS
FOR VIOLATION OF ANY PROVISION OF THIS CODE OR ANY OTHER LAWS
ADMINISTERED BY THE COMMISSION, OR THE RULES AND REGULATIONS
THEREUNDER, OR EFFECTED, DIRECTLY OR INDIRECTLY, ANY TRANSACTION FOR ANY
PERSON WHO, SUCH MEMBER OR PARTICIPANT HAD REASON TO BELIEVE, WAS
VIOLATING IN RESPECT OF SUCH TRANSACTION ANY OF SUCH PROVISIONS; AND
©) TO REMOVE FROM OFFICE OR CENSURE ANY OFFICER OR DIRECTOR OF A SELF-
REGULATORY ORGANIZATION IF IT FINDS THAT SUCH OFFICER OR DIRECTOR HAS
VIOLATED ANY PROVISION OF THIS CODE, ANY OTHER LAW ADMINISTERED BY THE
COMMISSIONER, THE RULES OR REGULATIONS THEREUNDER ANO.THE RULES OF SUCH
SELF-REGULATORY ORGANIZATION, OR HAS ABUSED HIS AUTHORITY, OR WITHOUT
REASONABLE JUSTIFICATION OR EXCUSE HAS FAILED TO ENFORCE COMPLIANCE WITH
ANY OF SUCH PROVISIONS.
“SEC. 413-L_ {1} A SELF-REGULATORY ORGANIZATION 1S AUTHORIZED TO DISCIPLINE A
MEMBER OF OR PARTICIPANT IN SUCH SELF-REGULATORY ORGANIZATION, OR ANY PERSON
ASSOCIATED WITH A MEMBER, INCLUDING SUSPENDING OR EXPELLING SUCH MEMBER OR

PARTICIPANT, OR SUSPENDING OR BARRING SUCH PERSON FROM BEING ASSOCIATED WITH &
MEMBER, IF ENGAGED IN ACTS OR PRACTICES INCONSISTENT WITH JUST AND EQUITABLE
PRINCIPLES OF FAIRNESS OR IN WILLFUL VIOLATION OF ANY PROVISION OF THE CODE, ANY OTHER



ne

ww Ane

”ARAGRAPH

REGULATORY ORGANIZATION (OTHER THAN A SUMMARY PROCEEDING PURSUANT TO P.
(2) OF THIS SECTION) THE SELF-REGULATORY ORGANIZATION SHALL BRING SPECIFIC CHARGES,
PROVIDE NOTICE TO THE PERSON CHARGED, AFFORD THE PERSON CHARGED WITH AN
OPPORTUNITY TO DEFEND AGAINST THE CHARGES, AND KEEP A RECORD OF THE PROCEEDINGS. A
DETERMINATION TO IMPOSE A DISCIPLINARY SANCTION SHALL BE SUPPORTED BY A WRITTEN
STATEMENT OF THE OFFENSE, A SUMMARY OF THE EVIDENCE PRESENTED AND A STATEMENT OF
THE SANCTION IMPOSED.

(2) A SELF-REGULATORY ORGANIZATION MAY SUMMARILY: {I} SUSPEND A MEMBER,
PARTICIPANT OR PERSON ASSOCIATED WITH A MEMBER WHO HAS BEEN OR IS EXPELLED OR
SUSPENDED FROM ANY OTHER SELF-REGULATORY ORGANIZATION; OR (Il) SUSPEND A MEMBER
WHO THE SELF-REGULATORY ORGANIZATION FINDS TO BE IN SUCH FINANCIAL OR OPERATING
DIFFICULTY THAT THE MEMBER OR PARTICIPANT CANNOT BE PERMITTED TO CONTINUE TO DO
BUSINESS AS A MEMBER WITH SAFETY TG INVESTORS, CREDITORS, OTHER MEMBERS, PARTICIPANTS
OR THE SELFREGULATORY ORGANIZATION: PROVIDED, THAT THE SELF-REGULATORY
ORGANIZATION IMMEDIATELY NOTIFIES THE COMMISSION OF THE ACTION TAKEN. ANY PERSON
AGGRIEVED BY A SUMMARY ACTION PURSUANT TO THIS PARAGRAPH SHALL BE PROMPTLY
AFFORDED AN OPPORTUNITY FOR A HEARING BY THE ASSOCIATION IN ACCORDANCE WITH THE
PRECEDING PARAGRAPH. THE COMMISSIONER, BY ORDER, MAY STAY A SUMMARY ACTION ON HIS
OWN OR UPON APPLICATION BY ANY PERSON AGGRIEVED THEREBY, IF THE COMMISSIONER
DETERMINES SUMMARILY GR AFTER DUE NOTICE AND HEARING (WHICH HEARING MAY CONSIST
SOLELY OF THE SUBMISSION OF AFFIDAVITS OR PRESENTATION OF ORAL ARGUMENTS) THAT A STAY
1S CONSISTENT WITH TRE PUBLIC INTEREST AND THE PROTECTION OF THE INSURING PUBLIC.

(3) A SELF-REGULATORY ORGANIZATION SHALL PROMPTLY NOTIFY THE COMMISSION OF
ANY DISCIPLINARY SANCTION ON ANY MEMBER THEREGF OR PARTICIPANT THEREIN, ANY DENIAL OF
MEMBERSHIP OR PARTICIPATION IN SUCH ORGANIZATION, OR THE IMPOSITION OF ANY
DISCIPUNARY SANCTION ON A PERSON ASSOCIATED WITH A MEMBER OR A BAR OF SUCH PERSON
FROM BECOMING SO ASSOCIATED. WITHIN THIRTY (30) DAYS AFTER SUCH NOTICE, ANY AGGRIEVED
PERSON MAY APPEAL TO THE COMMISSIONER FROM, OR THE COMMISSIONER ON ITS OWN
MOTION WITHIN SUCH PERIOD, MAY INSTITUTE REVIEW OF, THE DECISION OF THE SELF
REGULATORY ORGANIZATION, AT THE CONCLUSION OF WHICH, AFTER DUE NOTICE AND HEARING
(WHICH MAY CONSIST SOLELY OF REVIEW OF THE RECORD BEFORE THE SELF-REGULATORY
ORGANIZATION}, THE COMMISSIONER SHALL AFFIRM, MODIFY OR SET: ASIDE THE SANCTION. iN
SUCH PROCEEDING, THE COMMISSIONER SHALL DETERMINE WHETHER THE AGGRIEVED PERSON
HAS ENGAGED OR OMITTED TO ENGAGE IN THE ACTS AND PRACTICES AS FOUND BY THE SELF-

REGULATORY ORGANIZATION, WHETHER SUCH ACTS AND PRACTICES CONSTITUTE WILLFUL
poe ee -



VIOLATIONS OF THIS CODE, ANY OTHER LAW ADMINISTERED BY THE COMMISSION, THE RULES OR
REGULATIONS THEREUNDER, OR THE RULES OF THE SELF-REGULATORY ORGANIZATION AS
SPECIFIED BY SUCH ORGANIZATION, WHETHER SUCH PROVISIONS WERE APPLIED IN A MANNER
CONSISTENT WITH THE PURPOSES OF THIS CODE, AND WHETHER, WITH DUE REGARD FOR THE
PUBLIC INTEREST AND THE PROTECTION OF INVESTORS THE SANCTION IS EXCESSIVE OR
“OPPRESSIVE”
SEC. 70. Section 414 of the insurance Code hereby amended to read as follows:
"Sec. 414, THE INSURANCE COMMISSIONER SHALL 8E APPOINTED BY THE PRESIDENT OF THE
REPUBLIC OF THE PHILIPPINES FOR A TERM OF Six (6) YEARS WITHOUT REAPPOINTMENT AND WHO
SHALL SERVE AS SUCH UNTIL THE SUCCESOR SHALL HAVE BEEN APPOINTED AND QUALIFIED. IF THE
INSURANCE COMMISSIONER IS REMOVED BEFORE THE EXPIRATION OF HIS TERM OF OFFICE, THE
REASON FOR THE REMOVAL MUST BE PUBLISHED.
“The Insurance Commissioner shall have the duty to see that all taws 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 upon him by this Code,
and shail, 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 two hundred thirty-two
HEREOF and to provide for the licensing of persons selling such contracts, and to issue such
reasonable rules and regulations governing the same.
“The Commissioner may issue such rulings, instructions, circulars, orders and decision as [he]
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 [subject-to-the-approval-of the Secretary of
Finance]. Except as otherwise specified, decisions made by the Commissioner shail be appealable to
the Secretary of Finance.
IN ADDITION TO THE FOREGOING, THE COMMISSIONER SHALL HAVE THE FOLLOWING
POWERS AND FUNCTIONS
3) FORMULATE POLICIES AND RECOMMENDATIONS ON ISSUES CONCERNING THE
INSURANCE INDUSTRY, ADVISE CONGRESS AND OTHER GOVERNMENT AGENCIES ON
ALL ASPECTS OF THE INSURANCE INDUSTRY AND PROPOSE LEGISLATION AND
AMENDMENTS THERETO;

b) APPROVE, REJECT, SUSPEND OR REVOKE LICENSES OR CERTIFICATES OF
REGISTRATIONS PROVIDED FOR BY THIS CODE;

©) IMPOSE SANCTIONS FOR THE VIOLATION OF LAWS AND THE RULES, REGULATIONS



a)

e)

8)

hy

x}

v7

m)

PREPARE, APPROVE, AMEND OR REPEAL RULES, REGULATIONS AND ORDER, AND

ISSUE OPINIONS AND PROVIDE-GUIDANCE ON AND SUPERVISE COMPLIANCE WITH™~
SUCH RULES, REGULATIONS AND ORDERS;

ENLIST THE AID AND SUPPORT OF, AND/OR DEPUTIZE ANY AND ALL ENFORCEMENT
AGENCIES OF THE GOVERNMENT IN THE IMPLEMENTATION OF ITS POWERS AND

FUNCTIONS UNDER THIS CODE;
ISSUE CEASE AND DESIST ORDERS TO PREVENT FRAUD OR INJURY TO THE INSURING

PUBLIC;
PUNISH FOR CONTEMPT OF THE COMMISSIONER, BOTH DIRECT AND INDIRECT, IN
ACCORDANCE WITH THE PERTINENT PROVISIONS OF AND PENALTIES PRESCRIBED BY
THE RULES OF COURT;

COMPEL THE OFFICERS OF ANY REGISTERED INSURANCE CORPORATION OR
ASSOCIATION TO CALL MEETINGS OF STOCKHOLDERS OR MEMBERS THEREOF UNDER
ITS SUPERVISION;

ISSUE SUBPOENA DUCES TECUM AND SUMMON WITNESSES TO APPEAR IN ANY
PROCEEDING OF THE COMMISSION AND IN APPROPRIATE CASES, ORDER THE
EXAMINATION, SEARCH AND SEIZURE OF ALL DOCUMENTS, PAPERS, FILES AND
RECORDS, TAX RETURNS, AND BOOKS OF ACCOUNTS OF ANY ENTITY OR PERSON
UNDER INVESTIGATION AS MAY BE NECESSARY FOR THE PROPER DISPOSITION OF THE
CASES BEFORE IT, SUBJECT TO THE PROVISION OF EXISTING LAWS;

SUSPEND OR REVOKE, AFTER PROPER NOTICE AND HEARING THE LICENSE OR
CERTIFICATE OF AUTHORITY OF ANY ENTITY OR PERSON UNDER ITS REGULATION,
UPON ANY OF THE GROUNDS PROVIDED BY LAW;

CONDUCT AN EXAMINATION TO DETERMINE COMPLIANCE WITH LAWS AND
REGULATIONS IF THE CIRCUMSTANCES SO WARRANT AS DETERMINED BY
APPROPRIATE RULES AND REGULATIONS;

INVESTIGATE NOT OFTENER THAN ONCE A YEAR FROM THE LAST DATE OF
EXAMINATION TO DETERMINE WHETHER AN INSTITUTION 1S CONDUCTING ITS
BUSINESS ON A SAFE AN SOUND BASIS: PROVIDED, THAT, THE
DEFICIENCIES/IRREGULARITIES FOUND BY OR DISCOVERED BY AN AUDIT SHALL BE
IMMEDIATELY ADDRESSED;

INQUIRE INTO THE SOLVENCY AND LIQUIDITY OF THE INSTITUTIONS UNDER ITS
SUPERVISION AND ENFORCE PROMPT CORRECTIVE ACTION;



nu

Co a ee ao

n) TO RETAIN AND UTILIZE, IN ADDITION TO ITS ANNUAL BUDGET, ALL FEES, CHARGES
AND OTHER INCOME DERIVED FROM THE REGULATION OF INSURANCE COMPANIES

AND OTHER SUPERVISED PERSONS OR ENTITIES;
0} TO FIX ANO ASSESS FEES, CHARGES AND PENALTIES AS THE COMMISSIONER MAY FIND
REASONABLE IN THE EXERCISE OF REGULATION; AND
p) EXERCISE SUCH OTHER POWERS AS MAY BE PROVIDED SY LAW AS WELL AS THOSE
WHICH MAY BE IMPLIED FROM, OR WHICH ARE NECESSARY OR INCIDENTAL TO THE
THE EXPRESS POWERS GRANTED THE COMMISSION TO ACHIEVE THE OBJECTIVES AND
PURPOSES OF THIS LAW.

“EXCEPT FOR GROSS NEGLIGENCE OR MISCONDUCT, THE COMMISSIONER, DEPUTY
COMMISSIONER, OFFICERS OR EMPLOYEES OF THE COMMISSION SHALL BE EXEMPT FROM, AND
SHALL NOT BE HELD LIABLE FOR, ANY ACTION OR SUIT IN CONNECTION WITH OR RELATED TO THE
PERFORMANCE OF THEIR DUTIES AND FUNCTIONS AS PROVIDED FOR IN THIS ACT, THE INSURANCE
CODE OF 1978, AS AMENDED, CIRCULARS OR RULES AND REGULATIONS PROMULGATED BY THE
COMMISSION OR OTHER APPLICABLE LAWS AND PERTINENT RULES AND REGULATIONS. THE
COMMISSION SHALL INDEMNIFY THE COMMISSIONER, DEPUTY COMMISSIONER, OFFICERS OR
EMPLOYEES OF THE COMMISSION PERFORMING SUCH DUTIES AND FUNCTIONS, FOR ALL COSTS
AND EXPENSES REASONABLY INCURRED IN CONNECTION WITH ANY CIVIL OR CRIMINAL ACTION,
SUITS OR PROCEEDINGS TO WHICH THEY MAY BE MADE A PARTY TO BY REASON OF THEIR
PERFORMANCE OF SUCH DUTIES AND FUNCTIONS, UNLESS THEY ARE FINALLY ADJUDGED IN SUCH
ACTIONS, SUITS OR PROCEEDINGS TO BE LIABLE FOR GROSS NEGLIGENCE OR MISCONDUCT.

“THE COSTS AND EXPENSES INCURRED IN DEFENDING THE AFOREMENTIONED ACTION, SUIT
OR PROCEEDING MAY BE PAID SY THE COMMISSIONER IN ADVANCE OF THE FINAL DISPOSITION OF
SUCH ACTION, SUIT OR PROCEEDING UPON RECEIPT OF AN UNDERTAKING BY OR ON BEHALF OF THE
COMMISSIONER, DEPUTY COMMISSIONER, OFFICERS OR EMPLOYEES TO REPAY THE AMOUNT
ADVANCED SHOULD IT ULTIMATELY 8€ DETERMINED BY THE COMMISSION THAT THE PERSON
ENTITLED TO BE INDEMNIFIED AS PROVIDED IN THIS SECTION.”

SEC. 71. Section 415 of the Insurance Code is hereby amended to read as follows:

“Sec. 415. in addition to the administrative sanctions provided elsewhere in this Code, the

Insurance Commissioner is hereby authorized, at his discretion, to impose upon the insurance
ul failure or refusal to comply

companies, their directors and/or officers and/or agents, for any
ms

with, or violation of any provision of this Code, or any order, instruction, regulation, or ruling of the

Insurance Commissioner, or any commission or irregularities, and/or conducting business in an

unsafe or unsound manner as may be determined by the insurance Commissioner, the following:



fa) fines OF not LESS THAN FIVE THOUSAND PESOS AND NOT MORE THAN TWO

——_ HUNDRED THOUSAND PESOS [in-excess of five hundred pesos. 2-day]; and

(b) suspension, or after due hearing, removal of directors and/or officers and/or agents.

SEC. 72. Section 416, first paragraph, of the insurance Code is hereby amended to read as
follows:

“Sec. 416. The Commissioner 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, ar 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 amaunt 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 one [hundred

thousand} MILLION pesos.

xxx

SEC. 73. Section 408 of the insurance Code is hereby amended to read as follows:

“See. 419, Any person, company or corporation subject to the supervision and control of the
Commissioner who violates any provision of this Code, for which no penalty Is provided, shall be
deemed guitty of a penal offense, and upon conviction be punished by a fine not exceeding ten TWO
HUNDRED thousand pesos or imprisonment of six months, or both, at the discretion of the court.

If the offense is committed by a company or corporation, the officers, directors, or other
persons responsible for its operation, management, or administration, unless it can be proved that
‘they have taken no part in the commission of the offense, shall likewise be guilty of a penal offense,
Hon be punished by a fine not exceeding tea TWO HUNDRED thousand pesos or

and upon com
imprisonment of six months, or both, at the discretion of the court.”
SEC 74, This Act shall take effect upon approval.
Approved,

2m 20613



Gommitter on Banks sad Financial Intermediaries
soon House of Representatives

MINUTES OF THE 22 MARCH 2011 MEETING
Ramon V. Mitra Jr. Bidg., Conference Room 14
Batasan Pambansa Complex, Quezon City

Honorable Sergio Apostol, Chairman, presiding.
Members Present:

Honorable Luis R. Villafuerte
Honorable Guillermo A. Romarate, +.
Honorable Jutieta R. Cortuna

Honorable Isidro Lico

Honorable Ma. Amelita Calimbas ~ Villarosa
Honorable Jeci A. Lapus

Honorable Philip A. Pichay

Honorable Georgidi 8. Aggabao

Honorable Monique Yazmin Lagdameo
Honorable Agapito H. Guantao

Honorable Carlos Paditta

Honorable Karlo Alexei B. Nograles
Honrable Wilfrido Mark Enverga

Honorable Dante Antonie Tinio

Resource Persons:

Atty. Juan De Zuniga, Deputy Governor, Bangko Sentral ng Pili

Atty. Corazon Guerreo, Assistant Governor, BSP

Atty. Chuchi Fonacier, Director, BSP

Ms. Cristina Orbeta, Executive Vice President and Officer-in-Charge, Philippine Deposit Insurance
Corporation (PDIC)

Atty, Romeo Mendoza Jr., General Counsel, PDIC

Ms. Sandra Diaz, SVP, PDIC

Atty Perfecto Yasay Jr., Vice-Chairman, Banco Filipino

Mr. Teodoro Arcenas, President, Banco Fili

Ms. Maxy S. Azad, Executive Vice President, BAnco Fi

Committee Secretary: Atty Ramon Federizon

AGENDA: ‘L TWG Report on insurance Code Amendents

2. Hearing on the closure of Banco Filipino

wee Ba sop

® see js aonbat “3/r macan Parnes Compben: tatasan Baad, Queton city 1126
Prone +632 51-4336, Fax +632 952-3583, Eri comberks@iyahon com

Sa saeoR oe . es ee ae


Cali ta Order

The meeting was called to order at 9:45 am. On motion, the calling of the roll was
dispensed with.

Approval of the TWG report on the Insurance Code amendments

‘The committee approved the substitute bill on the amendments to the Insurance Code as
presented by Representative Romarate, head of the technical working group on the insurance code
amendments.

Hearing on the closure of Banca Fitipina

BSP officials led by its general counsel Deputy Governor Juan De Zuniga briefed the
committee on the closure of Banco Filipino. He said the Monetary Board denied the application of
‘the bank for emergency loans to cover heavy withdrawals and placed the bank under receivership
because the bank did not meet the conditions and requirements prescribed under Section 84 of RA
7653 (New Central Bank Act), These are: 1) solvency of the bank; 2) sufficiency of collaterals; and 3)
vate of at least 5 MB members.

Atty. Zuniga disclosed that the bank had a negative realizable value of P8.4 billion as of 30
September 2010 regular examination. The examination report showed the following major findings:

1, Negative capital adequacy ratio (CAR) - 142%

2. High past due loans ration 92%

3. DOSRI loans OF P2.2 billion are all past due (54%) of total joan portfolio

4, Chronic reserve deficiencies

5. Past due borrowings from the BSP ~ P4.4 bitlion

annual operating lass of P2.8 bition (2007-2009)

7. high cost deposits: Interest rate on deposit ranges from 6% to 13.9% vs. market rate of 1
2%.

Atty, Perfecto Yasay, Jr. of Banco Filipino said that the BSP did not comply with the
December 1991 decision of Supreme Court ordering the Central Bank to reorganize the bank under
@ workable plan that would allow Banco Filipino to operate with safety to its customers and
depositors. He said that the 8SP undermined the recovery efforts of the bank by forcing the bank in
1999 to turn over its prime properties as payment for a emergency loan obtained in 1985 and by
instigating malicious rumors that triggered withdrawals in 2002. He said that It was only in
November 2009 that BSP approved a business plan for the bank providing for financial loan
assistance of P25 billion payable over a period of 20 years which the bank accepted. The
implementation of the business was subjected to the condition that the bank drop its claims and
waive all present and future actions against BSP.

He denied allegations that the bank is mismanaged because since its reopening it operated
Under the strict supervision and monitoring of BSP comptrollers

Mr. Teodoro Arcenas, president of Banco Filipina, said that the bank is not insolvent, that
its net assets amounted to around P19 bitlion and that it has sufficient collaterals to support its claim
for emergency loans. He emphasized that the bank has had a BSP-designated controller for the last
three years who would have prevented the bank from committing any unfair banking practice.


Congressman Villafuerte questioned the determination by the BSP of the sufficiency of the
collaterals offered by the bank. He also raised concerns on the manner by which the Monetary Board
acted with undue haste on the report of the examination, contrary to the procedure prescribed by
the Supreme Court in an earlier ruling. He noted that the Monetary Board closed the bank on the
same day the report of examination on the bank was submitted.

‘The PDIC committed to pay all the valid deposit daims within 90 to 120 days. Depasitors
with balances of P5,000 or less will have priority in payment. At present, PDIC is doing an inventory
of all the assets and records of the bank.

‘The committee will resume its hearing on May 17, 2011.

Adjournment

The meeting was adjourned at 12.15 p.m.

thereby certify to the correctness of the foregoing

RAMON R. FEDERIZON
Committee Secretary

Attest:

SERGIO AF. APOSTOL

Chairman


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

FIFTEENTH CONGRESS -
First Regutar Session

i.B.No._1502

Introduced by HONORABLE JUAN EDGARDO “SONNY” M. ANGARA

EXPLANATORY NOTE

‘The Philippine insurance laws are embodied in Presidential Decree No. 1460 (PO 1460),
otherwise known as “The Insurance Code of 1978", PD 1460 consolidated ail insurance laws
into a single Code and it basically reenacted Presidential Decree No. 612 (PD 612) which was
promulgated on December 18, 1974. PD 612 ordained and instituted the insurance Code of the
Philippines. Except for certain amendments effected under Presidential Decree No. 1814 (PD
1814) on January 16, 1981 and Batas Pambansa Big. B74 (BP 874) on June 12, 1985, the
Insurance Code of 1978 has not undergone any significant revision. PD 1814 amended
Sections 305 (c}, 373 (c}, 376 (), 373, 377, 379 and 384 of the Insurance Code of 1978, When
the unicameral legislative assembly was convened during the Martial Law regime, the Batasang
Pambansa further amended Sections 27, 45, 180-A. 184 and 416 of PD 1460. These
amendments were necessitated by the prevailing economic conditions at thal time and were
undertaken to ensure the due execution and performance of insurance contracts in the interests
of the sound development of the national economy. Over the years since these amendments
were made, the Philippine economy has undergone significant changes. The recent financial
turmoil calls for a review of our iaws which impact our economic development such as our
insurance laws to ensure that the insurance industry becomes more efficient and effective in
bringing about financial stability and growth and consumers continue to be protected. It is not
heretical to say that the Insurance Code of 1978 has become inadequate, and at times even
obsolete, to cope with the changing business environment and economic progress. This
development renders the proposed amendments absolutely necessary and inevitable if the
insurance industry is to remain an engine of economic growth and the consumer continues to
have confidence in the Industry.

The amendments proposed in this bill were motivated and guided by 32 years of
experience under the Insurance Code of 1978 and by the rapid developments in the world af
commerce, trade and industry during the recent decades. All over the world, the regulatory
regime is undergoing a serious review and determined efforts are being made to make the {aws
and regulations more relevant and responsive. We do not have to look outside to convince us of
this development since our very own Gongress has undertaken similar legislative initiatives in
other financial fronts such as in banking, securities, investments, credit, finance together with
pre-need and succeeded in passing much needed legislations to support these industries
‘There is no question that these legislative interventions and structural reforms have revitalized
activities and production within banking and other financial sectors and consumers have also
benefited from these laws. Amending the Insurance Code of 1978 is in keeping with our national
policy to preserve the gains of the insurance industry and accelerate its further growth and
development and ensure consumers are allowed choices as, well as fair and equitable
treatment.

It cannot be disputed that the insurance industry is 2 major pillar of the Philippine
economy. Insurance mobilizes savings in‘ long-term investments, It is indispensable in
romoting capital market development an ization. It is an efficient farm of raising—



capital which is used to fuel our econciny. The insurance industry is among the largest
eee re inthe bond market and similar instruments. Its tong term placements offer more ideal
fee of financing that sui the needs of both the goverment and the private sector. Life
ineurance companies through their pension plans and retirement products supplement, f not
substiute, for state-provided social security programs. Thus, aside from fulfiling its ertical rove
@ providing. protection and financial securty to our people. the insurance industry's
contributions is immense and immeasurable, It is an indispensable partner of he govemment in
rational development,

It is our collective desire to craft and fashion an insurance code which our insurers and
‘heir intermediaries can utilize to attain more efficiently their economic ends and to expand more
efectively their insurance activities that will assure the insuring public greater insufanee
protection and financial security. This proposed bill introduces significant changes in practically
al ttles and chapters of the Code, However, despite the numerous changes fo PD 1460 which
have been adopted in this proposed measure, many provisions of the existing Code were
felamned. ‘This revision has also considered the relevant circulars and regulations issued by the
insurance Commission in the exercise of its regulatory and supervisory powers under the laws
Forhermore, in keeping with the growth of commerce and trade, new insurance activities which
wore not mantioned at all in the existing Code such as micro-insurance, bancassurance and
other recent developments in the industry are now provided for. Moreover, this bill aims to
reinforce the insurance Commission in performing its functions as the principal regulator of the
insurance industry consisting of the life and non-ife companies, reinsurers, and allied entities,
intermediaries and insurance professionals such as the mutual benefit associations, micro
insurers, bancassurance, brokers, general agents, individual agents, adjusters, actuaries, rating
organizations, and others, and to augment their management, operations and practices on an
even sounder, stable and professional basis.

This bill shall further promote and develop a strong national insurance industry which
can assist the ability of the Industry to compete with foreign players when the ASEAN Economic
Market opens up sometime in 2015. It is therefore imperative that this bill be passed into law.

tn view of the foregoing, an early enactment of this measure is earnestly requested.

Represenéative
Lone District, Province of Aurora



FIFTEENTH CONGRESS OF THE ~—)
REPUBLIC OF THE PHILIPPINES —)
First Regular Sessian ) ~

W.B.No,_1502

Introduced by Honorable JUAN EDGARDO “SONNY” M. ANGARA

AN ACT
AMENDING PRESIDENTIAL DECREE NO. 612, OTHERWISE KNOWN AS THE
INSURANCE CODE, AS AMENDED BY PRESIDENTIAL DECREE NOS. 1141, 1280,
1455, 1460, 1814, AND 1981, AND BATAS PAMBANSA BLG. 874, AND FOR
OTHER PURPOSES

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

SECTION 4. Title. - This Act shall be known as "The Insurarice Code of 2010".

SEC. 2. Section 1 of The Insurance Code, as amended, is hereby amended to
read as follows

“Section 1. This Act shail be known as 'The insurance Code of 2010."

SEC. 3. Section 2, paragraph 2 (d) of The Insurance Code, as amended, is
hereby amended fo read as follows:

*(d) doing or proposing to do any business in substance equivalent to any of the
foregoing in 2 manner designed to evade the provisions of this Code, including
the practice of self-insurance by any person or entity extending life insurance or
similar protection to its borrowers, depositors, clients or third partes.”

SEC 4. Section 3 of The Insurance Code, as amended, is hereby amended to

read as follows:

“Sec. 3. Any contingent or unknown event, whether past or future, which
may damnify a person having an insurable interest or create a lability against
him, may be insured against, subject to the provisions of this chapter

“The consent of the spouse is not necessary for the validity of an
insurance policy taken out by a married person on his or her life or that of his or

her children



“All rights" tile and interest in the policy of insurance taken’ out by an ©

original owner on the Sife or health of the person insured shal automatically vest
in the latter upon the death of the original owner, unless otherwise provided for in
the policy.”

SEC. 5. Section 6 of The Insurance Code, as amended, is hereby amended to
read as follows:
“Sec, 6. Every corporation, partnership, or association duly authorized to
transact insurance business as elsewhere provided in this code, may be an

insurer.”

SEC. 6. Section 12 of The Insurance Code, as amended, is hereby amended to
read as follows:

“Sec. 12. The interest of a beneficiary in a life insurance policy shall be forfeited
when the beneficiary is the principal, accomplice, or accessory in willfully bringing
about the death of the insured, In such a case, the share forfeited shall pass on to
the other beneficiaries, unless otherwise disqualified. In the absence of other
beneficiaries, the proceeds shall be paid in accordance with the policy contract. If
the policy contract is silent, the proceeds shall be paid to the insureds estate.”

SEC. 7. Section 45 of The Insurance Code, as amended, is hereby amended ta
read as follows:

“Sec. 45, If a representation is false in a material point, whether affirmative
of promissory, the injured party is entitled to rescind the contract from the time

when the representation becomes false.”

SEC. 8. The last paragraph of Section 50 of The insurance Code, as amended,
is hereby deleted,

SEC. 9. Section 60 of the Insurance Code, as amended, is hereby amended to
read as follows:

“Sec. 60. An open policy is one in which the value of the thing insured is not
agreed upon, ‘and the amount of the insurance merely represents the insurer's



maximum liability. The value of such thing insured shall be ascertained at the time
of the loss.7—

SEC. 10. Section 64, paragraph (f) of The Insurance Code, as amended, is
hereby amended to read as follows:

+f discovery of other insurance coverage that makes the total Insurance
in excess of the value of the property insured; or a determination by the
Commissioner that the continuation of the policy would violate or would place the
insurer in violation of this Code.”

SEC. 11. Section 65 of The Insurance Code, as amended, is hereby amended to
tead as follows:

“Sec. 65. All notices of cancellation mentioned in the preceding section shall be
in writing, mailed or delivered to the named insured at the address shown in the
policy or to his broker, and shall state (a) which of the grounds set forth in section
sity four is relied upon and (b) that, upon written request of the named insured,
the insurer will furnish the facts on which the cancellation is based.

SEC. 12, Section 77 of The Insurance Code, as amended, is hereby amended to

read as follows:

“See. 77. An insurer is entitled to payment of the premium as soon as the
thing insured is exposed to the peril insured against. Notwithstanding any
agreement to the contrary, no policy or contract of insurance issued by an
insurance company is valid and binding uniess and until the premium thereof has
been paid, except in the case of a life or an industrial life policy whenever the
grace period provision applies, or whenever under the agency agreements with
duly licensed intermediaries, @ 90-day credit extension is given. No credit
extension to 2 duly licensed intermediary should exceed 90-days from date of
issuance of the policy. Payments of premium to brokers are nat considered

payment of premium to the insurers.”

SEC. 13. A new Section 78 of The Insurance Code, as amended, is hereby
_added to read as follows.



“Sec. 78. An employee af the Republic of the Philippines, including its
political subdivisions and instrumentaiities, and goverment owned or controled
corporations, may pay his insurance premium and loan obligations through salary
shier, paymaster or official of the entity
employing the goverment employee is authorized, notwithstanding the

deduction: Provided, the treasurer,

provisions of any existing law, rules and regulations to the contrary, to make
deductions from the salary, wage or income of the latter Pursuant to the
agreement between the insurer and the government employee and to remit such
deductions to the insurer concemed, and collect such reasonable fee for its

services.”

SEC. 14. The old Section 78 af The insurance Code, as amended, is hereby

ranumbered as Section 79 and the sections subsequent thereto are accordingly

renumbered until Section 80, which shall be renumbered as Section 81

SEC, 15, Section @1 of The Insurance Code, as amended, is hereby

renumbered as Section 82 and amended to read as faltows:

“Sec. 82. A person insured is entitled to retum of the premium when the
contract is voidable and subsequently annulled under the provisions of the Civil
Code: or, on account of fraud or intentional misrepresentation of the insurer, or of
his agent, or on account of facts, the existence of which the insured was ignorant
without his fault; or when by any default of the insured other than actual fraud,
the insurer never incurred any liability under the policy.

“A person insured is not entitled to a return of premium if the palicy is

annulled, rescinded or if a claim is denied by reason of his fraud or

misrepresentation.”

SEC. 16. Section 82 of The Insurance Code, as amended, is hereby

renumbered as Section 83 and amended to read as follows:

added to read as follows:

“Sec. 83. In case of an over-insurance by several insurers other than life,
the insured is entitled to a ratable retum of the premium, proportioned to the
amount by which the aggregate sum insured in all the policies exceeds the
insurable value of the thing at risk.”

SEC. 17. A new Section 84 of The Insurance Code, as amended, is hereby



"Sec. 84. An insurer may contract and accept payments, in addition to
- regular premium, for the purpose of paying future premiums on the policy or to
increase the benefits thereot™

SEC. 18. The old Section 83 of The Insurance Code, as amended, is hereby
renumbered as Section 85 and the sections subsequent thereto are accordingly
renumbered until Section 87, which shall be renumbered as Section 69.

SEC. 19. Section 86 of The Insurance Code, as amended, is hereby
renumbered as Section 30 and amended to read as follows.

“Sec, 90. In case of loss, an insurer is exonerated, if notice thereof be not
given to him by an insured, or some person entitled to the benefit of the
insurance, without unnecessary delay from occurrence af the loss, In case of
death, an insurer is likewise exonerated if notice thereof be not given the insurer
without unnecessary delay from discovery of death.”

SEC. 20. The old Section 89 of The Insurance Code, as amended, Is hereby
renumbered as Section 91 and the sections subsequent thereto are accordingly
renumbered until Section 93, which shall be renumbered as Section 95

SEC. 21. Section 94 of The Insurance Gode, as amended, is hereby
renumbered as Section 96 and amended to read as follows:
“gec. 96. Where the insured, in a policy ather than life,

double insurance:

overinsured by

-{a) The inured, unless the policy otherwise provides, may claim payment from
the insurers in such order as he may select, up to the amount for which the
insurers are severally liable under their respective contracts,

“(b) Where the polioy under which the insured claims is @ valued policy,
any sum received by him under any other policy shall be deducted from the value
of the policy without regard to the actual value of the subject matter insured:

*(c) Where the policy under which the insured claims fs an unvalued policy
any sum received by him under any policy shall be deducted against the full
insurable value, for any sum received by him under any policy:

*(@) Where the insured receives any sum in excess of the valuation in the
case of valued poficles, of of the insurable value in the case of unvalued policies
he must hold such sum in trust for the insurers, according to their right of

contribution among themselves;



+(e) Each insurer is bound, as between himself and the other insurers, to
contribute ratably to the loss in proportion to the amount for which he is able
under his contract.”
SEC. 22. The old Section 95 of The insurance Code, as amended, Is hereby

renumbered as Section 97 and the sections subsequent thereto are accordingly

renumbered until Section 178, which shall be renumbered as Section 180.

SEC. 23. Section 179 of The Insurance Code, as amended, is hereby

renumbered as Section 181 and amended to read as follows:

“Sec. 181. Life insurance is insurance on human lives and insurance
appertaining thereto or connected therewith

"Every contract or undertaking for the payments of annuities including
contracts for the payment af lump sums under a retirement program where a life
insurance company manages or acts as a trustee for such retirement program
shall be considered a life insurance contract for purposes of this Code.

“A fife insurance policy may also be taken by an individual who intends to travel
by ship or airplane. Such policy shall be effective onty during the course af the

travel.”

SEC. 24. Section 180 of The Insurance Code, as amended, is hereby

renumbered as Section 182 and amended to read as follows:

“Sec, 182. An insurance upon life may be made payable on the death of
the person, or on his surviving a specified period, or otherwise contingently on
the continuance or cessation of life.

“Every contract or pledge for the payment of endowments or annuities
shall be considered a life insurance contract for purpose of this Code.

“In the absence of a judicial guardian, the father, or in the latter's absence
or incapacity, the mother, or any minor, who is an insured or @ beneficiary under
a contract of life, health or accident insurance, may exercise, in behalf of said
minor, any right under the policy, without necessity of court authority or the giving
of @ bond, where the interest of the minor in the particular act involved does not
exceed two hundred fifty thousand pesos or in such amount as may be

determined by the Commissioner. Such right may include, but shall nat be limited

to, obtaining a policy loan, surrendering the policy, receiving the proceeds of the
policy, and giving the minor's consent to any transaction on the policy
“In the absence or in case_of the incapacity of the father or mother, the



telative who has actual custody of the minor insured ot beneficiary, shall act as a

guardian without need of a court order or judicial appointment as such guardian,

as long as such person is not otherwise disqualified or incapacitated Payment

made by the insurer pursuant to this section shall relieve it of any lability under

the contract.”

SEC. 25, The old Section 180-A of The Insurance Code, as amended, is hereby
renumbered as Section 183 and the sections subsequent thereto are accordingly
renumbered until Section 183, which shall be renumbered as Section 486.

SEC. 26. A new Title on Microinsurance and a new Section 187 of The
Insurance Code, as amended, are hereby added to read as follows:

“Title &
“MICROINSURANCE

“Sec. 187. The term ‘microinsurance" shall mean an activity providing specific
insurance, insurance-like and other similar products and services that meet the
needs af the low-income sector for risk protection and relief against distress,
misfortune and other contingent events. This shail include all forms of insurance,
insurance-ike and other similar activities with the following features:

a. Premiums, contributions, fees or charges are callected/deducted prior to

the occurrence of the a contingent event; and
b. Guaranteed benefits are provided upon occurrence of a contingent event.

“No insurance company shall engage in the business of microinsurance
unless it possesses all the requirements as may be prescribed by the
Commissioner. The Commissioner shall issue such rules and regulations

governing microinsurance."

SEC. 27. Section 184 of The Insurance Code, as amended, is hereby
renumbered as Section 188 and amended to read as follows:

“Sec. 188. For purposes of this Code, the term “insurer” or “insurance
company” shall include all partnerships, associations, or corporations, including
government-owned or controlled corporations or entities, engaged as principals.

in the insurance business:_Ufjess the context otherwise requires, the terms shall



also include professional reinsurers defined in section [two hundred eighty].
“Domestic company”. shall include companies formed, organized or existing

under the laws of the Philippines. "Foreign company" when used without
limitation shall include companies formed, organized, of existing under any laws
other than those of the Philippines.”

SEC. 28. Section 185 of The Insurance Code, as amended, is hereby

renumbered as Section 189 and amended to read as follows:

“Sec. 189. The provisions of the Corporation Code, as amended, shall apply to
all insurance corporations now or hereafter engaged in business in the
Philippines insofar as they do not conflict with the provisions of this chapter.”

SEC. 29, Section 185 of The Insurance Code, as amended, is hereby

renumbered as Section 190 and amended to read as follows:

“Sec. 190. No corporation, partnership, or association of persons shall
transact any insurance business in the Philippines except as agent of a
corporation, partnership or association authorized to do the business of
insurance in the Philippines, unless possessed of the capital and assets required
of an insurance corporation doing the same kind of business in the Philippines
and invested in the same manner; nor unless the Commissioner shall have
granted to it a certificate to the effect that it has complied with all the provisions of
this Code

“Every corporation, partnership, or association receiving any such
certificate of authority shall be subject to the insurance and other applicable laws
of the Philippines and to the jurisdiction and supervision of the Commissioner

and other appropriate government agencies.”

SEG. 30. Section 187 of The Insurance Code, as amended, is hereby

renumbered as Section 191 and amended to read as fallows:

“Sec. 191. No
in the Philippines until after it shall have obtained a certificate of authority for that

surance company shall transact any insurance business

purpose from the Commissioner upon application therefor and payment by the
company concerned of the fees hereinafter prescribed.

“The Commissioner may refuse to issue a certificate of authority to any
insurance company if, in his judgment, such refusal will best promote the interest
of the people of this country. Ne such certificate of authority Shall be granted to



examination a$ he may make and such evidence as he may requi
company is qualified by the laws of the Philippines to transact business therein,
that the grant of such authority appears to be justified in the light of economic
requirements, and that the direction and administration, as well as the integrity
and responsibilty of the organizers and administrators, the financial organization
and the amount of capital, reasonably assure the safety of the interests of the
policyholders and the public.

sin order to maintain the quality of the management of the Insurance
companies and afford better protection to policyhalders and the pubfic in general,
any person of good moral character, unquestioned integrity and recognized
competence may be elected or appointed director or officer of insurance
companies, in accordance with the pertinent provisions contained in the
Corporate Govemance circulars prescribed by the Commissioner. In addition
hereto, the Commissioner shall prescribe the qualifications of directors, executive
officers and other key officials of insurance campanies for purposes of this
section,

*No person shall concurrently be a director and/or officer of an insurance
company and an adjustment company. Before issuing such certificate of
authority, the Commissioner must be satisfied that the name of the company 1s
not that of any other known company transacting a sitnilar business in the
Philippines, or a name so similar as to be calculated to mislead the public, in
accordance with the provisions of the Corporation Code on the use of corporate
names.

“Every company receiving any such certificates of authority shall be
subject to the provisions of this Code and other related faws and to the
jurisdiction and supervision of the Commissioner and other appropriate
govemment agencies.

‘No insurance company may be authorized to transact in the Philippines
the business of life and non-life insurance concurrently unless specifically
authorized to do so by the Commissioner. Provided, That the terms “life” and
snon-life" insurance shall be deemed to include health, accident and disability
insurance

*No insurance company shall have equity in an adjustment company and
neither shall an adjustment company have equity in an insurance company.

SEC. 31. Section 188 of The Insurance Code, as amended, is hereby
renumbered as Section 192 and amended to read as follows



jac. 192. No domestic stock Insurance company shall engage in
insurance or reinsurance business in the Philippines unless possessed of the
required capitalization which includes minimum net worth and paid-up capital, as
defined and provided under applicable orders and/or circulars issued by the
Secretary of Finance, upon recommendation of the Insurance Commissioner.
The Secretary of Finance may change such minimum net worth and paid-up
capital stock requirement, under such terms and conditions as he may impose, te
‘an amount which, in his opinion, would reasonably assure the safety of the
interests of the policyholders and the public.

“The Commissioner may, as a pre-icensing requirement of 2 new
insurance company, in addition to the paid-up capital stock, require the
stockholders to pay in cash to the company in proportion to their subscription
interests a contributed surplus fund in an amount as may be fixed inapplicable
orders and circulars duly issued by the Commissioner. He may also require such
company or already existing companies, to submit to him 2 capital build-up
program or a business plan showing the company's estimated receipts and
disbursements, as well as the basis therefor, for the next succeeding three years_

“if organized as a mutual company, in lieu of such capital stock, it must
have available cash assets in an amount not less than that required under
present or future applicable orders or circulars issued by the Secretary of
Finance, upon recommendation of the Commissioner. These required cash
assets must be net of all liabilities for losses reported, expenses, taxes, legal
reserve, and reinsurance of all outstanding risks, and the contributed surplus:
fund must be equal to the amounts required af stock corporations, A stock
insurance company doing business in the Philippines may, subject to the
pertinent laws and regulations which now are of hereafter may be in force, alter
its organization and transform itself into a mutual insurance company.”

SEC. 32. The old Section 189 of The Insurance Code, as amended, is hereby
renumbered as Section 193 and the sections subsequent thereto are accordingly
renumbered until Section 190, which shall be renumbered as Section 194,

SEC. 33. Section 191 of The insurance Code, as amended, is hereby
renumbered as Section 195 and amended to read as follows:

“Sec. 195, No insurance company organized or existing under the
government or laws other than those of the Philippines shalt engage in business
inthe Philippines unless possessed of paid-up unimpaired capital or assets and



renum|

renumbered as Section 197.

applicable or order or circulars of the Commissioner, nor until it shall have
deposited with the Commissioner for the benefit and security of the policyholders
and creditors of such company in the Philippines, securities satisfactory to the
Commissioner consisting of good securities of the Philippines, including new
issues of stock of “registered enterprises’, as this term is defined in Omnibus
Investments Code, 2¢ amended, to the actual market value of not less than the
minimum paid-up capital required of domestic insurance companies: Provided,
That at least fifty per centum of such securities shall consist of bonds or other
evidences of debt of the Government af the Philippines, its political subdivisions
and instrumentalities, or of government-owned or controlled corporations and
entities, including the Bangko Sentral ng Pilipinas. Provided further, that the total
investment of a foreign insurance company in any registered enterprise shail not
‘exceed twenty per centum of the net worth of said foreign insurance company
nor twenty per centum of the capital of the registered enterprise, unless
previously authorized in writing by the Commissioner.

“For purpases of this Code, the net worth af a foreign insurance company
shall refer only to its net worth in the Philippines.”

SEC. 34. Section 192 of The Insurance Code, as amended, is hereby
bered as Section 196 and amended to read as follows:

“Sec. 196. The Commissioner shall hold the securities, deposited as
Tequired in the immediately preceding section, for the benefit and security of ail
the policyholders and creditors of the company depositing the same. Provided,

That the Commissioner may, as long as the company is sofvent, permit it to
collect the interest or dividends on the securities so deposited, and, from time to
time, with his assent, to withdraw any of such securities, upon depositing with
said Commissioner other tike securities, the market value of which shall be equal
to the market value of such as may be withdrawn. In the event of any company
ceasing to do business in the Philippines, the securities deposited as aforesaid
shall be returned upon the company, upon the Commissioner's written approval
and only after the company has duly proven in its application therefor that it has
no further liability whatsoever under any of its policies nor to any of its creditors
in the Philippines.”

SEC. 35. The old Section 193 of The Insurance Code, as amended, is hereby



SEC. 36. Section 194 of The Insurance Code, as amended, is hereby

renumbered as Section 198 and amended to read as follows:

“Sec. 198. An insurance company doing business in the Philippines shall
at all times maintain the minimum paid-up capital and networth requirements as
prescribed by the Commissioner. Such requirements shall be based on
intemationally accepted solvency frameworks and adopted only after due
consultation with and consideration of the recommendations of the insurance

industry associations.

Such assets, liabilities and reserves shall exclude assets, liabilities and reserves
included in separate accounts established in accordance with section [two
hundred thirty-seven]. Whenever the aforementioned margin be found to be less
than that herein required to be maintained, the Commissioner shall forthwith
direct the company to make good any such deficiency by cash, fo be contributed
by all stockholders of record in proportion to their respective interest, and paid to
the treasurer of the company, within fifteen days from receipt of the order:
Provided, That the company in the interim shall nat be permitted to take any new
risk of any kind or character unless and until it make good any such deficiency:
Provided, further, that a stockholder who aside from paying the contribution due
from him, pays the contribution due from the another stockholder by reason of
the failure or refusal of the latter to do so, shall have a lien on the certificates of
stock of the insurance company concemed appearing in its books in the name of
the defaulting stockholder on the date of default, as well as on any interests or
di

the corresponding payment or reimbursement is made by the defaulting
stockholder.”

lends that have accrued or will accrue to the said certificates of stock, until

SEC. 37. Section 195 of The Insurance Code, as amended, is hereby

renumbered as Section 199 and amended to read as follows:

“Sec. 199. No domestic insurance corporation shall declare or distribute
any dividend on its outstanding stocks unless it has met the minimum paid-up
capital and net worth requirements under Section One Hundred Ninety Eight and
except from profits attested in a swom statement to the Commissioner by the
president or treasurer of the carporation to be remaining on hand after retaining
unimpaired: :

“(a) The entire paid-up capital stack;



= =
{b) In the case of life insurance corporation, the legal reserve fund required by

Zection [two hundred eleven}; a
“{c) In the case of corporations other than fife, the legal reserve fund required by
section [two hundred thirteen];
“(d) A sum sufficient to pay ali net losses reported, or in the course of settlement,
and ail liabilities for expenses and taxes.

“Any dividend declared or distributed under the preceding paragraph shail
be reported to the Commissioner within thirty days after such ‘declaration or
distribution.

"If the Commissioner finds that any such corporation has declared or
distributed any such dividend in violation of this section, he may order such
corporation ta cease and desist from doing business until the amount of such
dividand or the portion thereof in excess of the amount allowed under this section
has been restored to said corporation.”

SEC, 38. Section 196 of The Insurance Code, as amended, is hereby

renumbered as Section 200 and amended to read as follows:

“Sec, 200. In any determination of the financial condition of any insurance
company doing business in the Philippines, there shall be allowed and admitted
as assets only such assets legally or beneficially owned by the insurance
company concerned as determined by extemal auditors accredited by the
Commissioner who examined the financial statements of the insurance company
concemed and which consist of

“1, Cash in the possession of the insurance company or in transit under its
control, and the true and duly verified balance of any deposit of such company in 8
financially sound commercial bank or trust company.

“2. Investments in securities, including money market instruments, and in
real property acquired or held in accordance with and subject to the applicable
provisions of this Gode and the income realized therefrom or accrued thereon

3, Loans granted by the insurance company concerned to the extent of
that portion thereof adequately secured by non-speculative assets with readiiy
fealizable values in accordance with and subject to the limitations imposed by
applicable provisions of this Code.

“4, Policy loans and other policy assets and liens on policies, contracts or
certificates of a life insurance company, in an amount not exceeding legal
reserves and other policy liabilities carried on Gach individual fife insurance
icy; contract or certificate. - “=



“6. The net amount of uncollected and deferred premiums and annuity
considerations in the case of a life insurance company which carries the full
mean tabular reserve liability.

“6. Reinsurance recoverable by the ceding insurer: (a) fram an insurer
authorized to transact business in this country, the full amaunt thereof; or (b)
from an insurer not authorized in this country, in an amount not exceeding the
liabilities carried by the ceding insurer for amounts withheld under a reinsurance
treaty with such unauthorized insurer as security for the payment of obligations
thereunder if such funds are held subject to withdrawal by, and under the control
of, the ceding insurer. The Commissioner may prescribe the conditions under

insurer may be allowed credit, as an asset or as a deduction from
loss and unearned premium reserves, for reinsurance recoverable from an
insurer not authorized in this country but which presents satisfactory evidence
‘that it meets the applicable standards of solvency required in this country.

“7, Funds withheld by a ceding insurer under a reinsurance treaty,
provided reserves for unpaid losses and uneamed premiums are adequately
provided

“8. Deposits or amounts recoverable from underwriting associations,
syndicates and reinsurance funds, or from any suspended banking institution, to
the extent deemed by the Commissioner to be available for the payment of
losses and claims and values to be determined by him.

“9. Electronic data processing machines, as may be authorized by the
Commissioner to be acquired by the insurance company concerned, the
acquisition cost of which to be amortized in equal annual amounts within a period
of five years from the date of acquisition thereof.

“40. Mutuat funds, real estate investment trusts, unit investment trust
funds and special deposit accounts.

“14. Other assets, not inconsistent with the provisions of paragraphs 1 to
10 hereof, which are deemed by the Commissioner to be readily realizable and
available for the payment of losses and claims at values to be determined by him
in a circular, rule or regulation.

“12. Other investments not otherwise covered by the above, provided that
such may be reclassified as non-admitted asseis afier a subsequent audit
conducted by the Commissioner.”

SEC. 39. The old Section 197 of The Insurance Code, as amended, fs hereby

renumbered as Section 201.



renumbered as Section 202 and amended te read as follows:

SEC, 40. Section’ 198 of The Insurance Code, as amended, is hereby

*Sec. 202. A life insurance company may lend to any of its policyholders
upon the security of the value of its policy such sum as may be determined
pursuant to the provisions of the policy,

“No insurance company shall loan any of its money or deposits to any
person, corporation or association, except upon the security of any of the
following :

+a) first mortgage or deeds of trust of registered, unencumbered, Improved
or unimproved real estate, including condominiums, in cities and centers of
population of municipalities in the Philippines; or

*p) first morigages of deeds of trust of actually cultivated, improved and
unencumbered agricultural lands in the Philippines; or

“c) purchase money morgages, lease purchase agreements or similar
securities executed or received by it on account of the sale or exchange of reat
property acquited pursuant to sections [two hundred and two hundred two]; or

“g) bonds or other evidences of indebtedness issued or guaranteed by the
of the Goverment of the Philippines or its political subdivisions authorized by
law to incur such obligations or issue such guarantees or of government-owned
or contratied corporations and instrumentallties including the Bangko Sentral ng
Pilipinas; or

“e) obligations issued or guaranteed by universal banks, commercial
banks, offshore banking units, investment houses or other financial
intermediaries duly registered with the Bangko Sentral ng Pilipinas; or

+f obligations issued or guaranteed by foreign banks or corporations, each
of which shall have total assets of one billion US dollars, as shown in their
financial statements as of the immediately preceding fiscal year, or

“g) assignments of monetary instruments such as cash deposits,
promissory notes, deposit certificates or other similar instruments of universal
banks, commercial banks, investments houses or other financial intermediaries
duly registered with the Bangko Sentral ng Pilipinas;

“in) pledges of shares of stock, bonds or other evidences of indebtedness.
specified in section {two hundred thirty-four};

*) chattel mortgages over equipment not more than three years old; and



“The loans provided in the preceding subsection shall be subject to the

*a) The amount of loan secured by real estate mortgage over a non-
agricuttural land shall net exceed eighty per centum of its appraised value, and in
the case of a loan secured by a real estate mortgage over an agrjcultural land,
the amount of loan shall not exceed forty per centrum of its market value.
Provided that, in no case shall such loan have a maturity period in excess of
twenty-five years;

“b) Unless approved by the Cammission, no Joan may be granted upon
the secutty of a mortgage on improved real estate if the improvements thereon
do not belong the owner of the !and and the owner of the improvements does not
signed the deed of mortgage. However, if the owner of the land is the
Government of the Philippines or any or its political subdivisions and a long term
lease has been executed in favor of the owner of the improvements, the owner of
the land need not be a party to the deed of mortgage. The expiration date of the
lease shall not, however, precede the maturity of the loan, The phrase ‘improved
real estate” as used herein shall mean land with permanent building or buildings
erected thereon;

“c) Purchase money mortgage, lease-agreements or similar securities
received on the sale of real estate property shall not exceed one hundred per
centum of the selling price of said property, or one hundred per centum of its
market value at the time of its disposition, whichever amount is lower. However,
in no case shall such mortgage or agreement have a maturity period of twenty-
five years:

*d) Loans secured by pledges of shares of stock of solvent
corporations or institutions shall not exceed fifty per centum: of.

1) The latest selling price of such stocks listed in the stock exchange or
unlisted stock traded elsewhere,

2) The book value of said stock, in case of stocks which are neither listed

in any stock exchange nor transacted elsewhere; but the.stock

jned to the



lending insurance company. The phrase “solvent corporation” as used
— herein shall mean a corporation or entity which has recorded profits for
a period of at least three years immediately preceding the date of the
loan,
“e) Loans secured by the chattel mortgages over equipment shall not
exceed seventy-five per centum of the market value of said equipment, and
"Venture capital investments, equity on loans, shall not exceed, per
investment, forty per centum of the insurance company's net worlh as shown in
its {atest financial statement approved by the Commission. ”
SEC. 41. Section 199 of The Insurance Code, as amended, is hereby

renumbered as Section 203 and amended to read as follows:

“Sec. 203. No foan by any insurance company an the security of real estate shall
be made uniess the title to such real estate shall have first been registered in
accordance with the existing Land Registration Act, or shall have been previously
registered under the provisions of the existing Mortgage Law and the lien or
interest of the insurance company as mortgagee has been registered.”

SEC. 42. Section 200 of The Insurance Code, as amended, is hereby

renumbered as Section 204 and amended to read as follows:

“Sec. 204. (1) An insurance company may purchase, hold, own and
convey such property, real and personal, as may have been mortgaged, pledged,
or conveyed to it in good faith in trust for its benefit by reason of money loaned
by it in pursuance of the regular business of the company, and such real or
personal property as may have been purchased by it at sales under pledges,
mortgages or deeds of trust for its benefit on account of money loaned by it; and
such real and personal property as may have been conveyed to it by borrowers
in satisfaction and discharge of loans made by the company In payment or by
reason of any loan made by it shall be sold by the company within twenty years
after the title thereto has been vested in it.

*(2) An insurance company may purchase, hold, own and convey real and
personal property as follows:

“(a) The real property in which the company conducts and carries on its
business; Provided, That no domestic non-life insurance company ‘shall invest in
the kinds permitted under this section an amount in excess of twenty per centum

“of the net worth of such insurer as shown by its latest financial statement

fed by the Board, =



“() Bonds or other evidence of indebtedness of the Government of the
Philippines of its poftical subdivisions authorized by law to Issue bonds at the
reasonable market value thereof

“(c) Bonds or other evidences of debt of the government-owned or
controlled corporations and entities, including the Bangko Sentral ng Pilipinas.

+(d) Bonds, debentures or other evidences of indebtedness of any solvent
corporations or institution created of existing under the laws of the Philippines
Provided, however, That the issuing, assuming or guaranteeing entity or its
predecessors shell not have defauited in the payment of interest on any of its
securities and that during each of any three including the last two of the five fiscal
years next preceding the date of acquisition by such insurance company of such
bonds, debentures, or other evidences of indebtedness, the net earnings of the
issuing, assuming or guaranteeing institution available for its fixed charges, as
hereinafter defined, shall have been not less than one and one-quarter times the
total of its fixed charges for such year, and Provided, further, that no life
insurance company shall invest in or loan upon the obfigations of any one
institution in the kinds permitted under this sub-section an amount in excess of
twenty-five per centum of the total admitted assets of such insurer as of
December thirty-first next preceding the date of such investment.

“As used in this sub-section the term ‘net earings available far fixed
charges" shal mean net income after deducting operating and maintenance
expenses, taxes other than income taxes, depreciation and depletion; but
excluding extraordinary nor-recurting items of income or expense appearing in
the regular financial statement of the issuing, assuming or guaranteeing
institution, The term “fixed charges” shall include interest on funded and
unfunded debt, amortization of debt discount, and rentals for leased properties.

“(e) Preferred or guaranteed stocks of any solvent corporation or
institution created or existing under the laws of the Philippines; Provided, That if
the stocks are guaranteed, the amount of stocks so guaranteed is not excess of
fifty per centum of the amount of the preferred or common stocks, as the case
may be, of the guaranteeing corporation, and Provided, finally, That no life
insurance company shall invest in or loan upon obligations of any one institution
in tha kinds permitted under this sub-section an amount in excess of ten per
centum of the total admitted assets of such insurer as of December thirty-first
next preceding the date of such investment

*{® Common stocks of any, solvent corporation or institution created or

Provided, however, That no life
insurance company shail invest in or loan=uApD-

existing under the laws of the Philippines.

he_obligations of any one



~_renumbered as Section 205 and amended towed -as follows:

corporation or institution in the Kinds permitted under this sub-section an amount
in excess of ten per centum of the total admitted assets of such insurer as of
December thirty-first next preceding the date of such investment.

*(q) Securities issued by an “registered enterprise’, as this term is defined
in Republic Act No. 5186, otherwise known as the investment incentives Act, as
amended, provided that the total investment of a domestic non life insurance
company in any registered enterprise shall not exceed fifty per centum of the net
worth of said insurance company as shown by its aforesaid financial statement
unless previously authorized by the Commissioner.

“{h) Certificates, notes and other obligations issued by the trustees or
receivers of any institution created or existing under the laws of the Philippines
which, or the assets of which, are being administered under the direction of any
court having jurisdiction; Provided, however, That such certificates, notes oF
other obligations are adequately secured as to principal and interests.

(i) Equipment trust obligations or certificates which are adequately
secured of other adequately secured instruments evidencing an interest in
equipment wholly or in part within the Philippines: Provided, however, That there
is a tight to receive determined portions of rental, purchase or other fixed
obligatory payments for the use or purchase of such equipment.

*G) Any obligation of any corporation or institution created or existing
under the laws of the Philippines which Is, on the date of acquisition by the
insurer, adequately secured and has qualities and characteristics wherein the
speculative elements are not predominant

*(k) Such other securities as may be approved by the Commissioner.

“(3) Any domestic insurer which has outstanding insurance, annuity or reinsurance
contracts in currencies other than the national currency of the Philippines may invest
in, or otherwise acquire or loan upon securities and investments in such currency
Which are substantially of the same kinds, classes and investment grades as those
eligible for investment under the foregoing subdivisions of this section; but the
aggregate amount of such investment and of such cash in such currenay which is at
anytime held by such insurer shall not exceed ane and one-half times the amount of
its reserves and other obligations under such contracts or the amount of its reserves
and other obligations under such contracts or the amount which such insurer iS
required by the law of any country outside the Republic of the Philippines to be
invest in such country, whichever shail be greater."

SEC. 43. Section 201 of The insurance Code, as amended, is hereby



“Sec, 205. An insurance company may (1) invest in equities of other
financial institutions, and (2) engage in the buying and selling of short-term debt
instruments: Provided, That any or all of such investments shall be with the prior
approval of the Commissioner, except listed equities of other financial
institutions.”

SEG. 44. Section 202 of The Insurance Code, as amended, is hereby

renumbered as Section 206 and its paragraph (a) is hereby amended to read as follows:

“{o) Acquire of sanstnud hovsing projects and, n connection wih any such project, may acqul land ar any terest
terom by purchase, ase oF otherwise, or use land acmured pursuant fo any other provision of nis Cade, Such company
may theceater own, maintain, mange, collect or receive income fom, or se 9nd convoy, any land oF terest therein 40
“acruired and any mmprovemants thereon The aggregate book vawe af the investments of any such comgany i all such
projects stall nol exceed othe te of such investments marty fee per canturn ofthe ital aaritad assets of stich
ernpany on the tinyfst day of December next preceding: Prewded, That tne funds of the company forte Payment ot
pending caims and obigatians shal not be used for such vestments

SEC. 45. The old Section 203 of The Insurance Code, as amended, is hereby

renumbered as Section 207 and the sections subsequent thereto are accordingly

renumbered until Section 207, which shall be renumbered as Section 241.

SEC. 46. Section 208 of The insurance Code, as amended, is hereby

renumbered as Section 212 and amended to read as follows:

“Sec. 212, (1) All bonds or other evidences of Indebtedness having a fixed
term and rate of interest and held by any life insurance company authorized to do
business in this country, if amply secured and if not in default as to principal or
interest, shall be valued based on their amortized cost using effective interest
method less impairment and unrecoverable amaunt based on appropriate
measurement methods which are generally accepted jin the industry and
accepted by the Commission, The Gommissioner shall have the power to
determine the eligibility of any such investments for valuation on the basis of
amortization, and may by regulation prescribe or limit the classes of securities so
eli

ible for amortization. All bonds or other evidences of indebtedness which in
the judgment of the Commissioner are not amply secured shall not be eligible for
amortization and shail be valued in accordance with paragraph two. The
Commissioner may, if he finds that the interest of policy halders so permit or
fequire, by official regulation permit or require any class or classes of insurers,

other than life insurance companies, authorized to do business in this country, to



value their bonds or olher evidences of indebledness in accordance with the
foregoing rule. i _

*(2) The investments of all insurers authorized to do business in this
country, except securities subject to amortization and except as otherwise
provided in this chapter, shall be valued, in the discretion of the Commissioner, at
their market value at their amortized cost using effective interest method less
impairment and unrecoverable amount or at valuation representing their fair
market value. if the Commissioner finds that in view of the character of
investments of any insurer authorized to do business in this country it would be
prudent for such insurer to establish a special reserve for possible losses or
fluctuations in the values of its investments, he may require such insurer to
establish such reserve, reasonable in amount, and include a report thereon in
any statement or report of the financial condition of such insurer. The
Commissioner may, in connection with any examination or required financial
statement of an authorized insurer, require such insurer to furnish him complete
financial statements and audited report of the financial condition of any
corporation of which the securities are owned wholly or partly by such insurer
and may cause an examination to be made of any subsidiary or affiliate of such
insurer as appropriate to specific investments as provided in appropriate circulars
issued by the Commissioner.

*(3) The stock of an insurance company shall be valued as follows: a)
listed stocks shall be valued at market value and periodically adjusted to reflect
market changes through a special valuation account to reflect their realizable
value when sold; b} unlisted stocks shall be valued at book value based on the
latest unqualified au

jted financial statements of the company which issued such
stocks; and c) stocks of a corporation under the control of the insurer shall be
valued using the equity method which is the cost plus or minus the share of the
controlling company in the earings or losses of the controlled company after
acquisition of such stocks.

*(4) The stock of an insurance company shall be valued at the lesser of its
market value or its book value as shown by its last approved audited financial
statements or the last report on examination, whichever is more recent. The book
value of a share of common stock of an insurance company shall be ascertained
by dividing (a) the amount of its capital and surplus less the value of all of its
preferred stock, if any, outstanding, by (b) the number of shares of its carnmon
stock issued and outstanding. Notwithstanding the foregoing provisions, an

insurer miay, at its option, value its holdings of stock in a subsidiary insurance



company in an-amount not fess than acquisition cost if such acquisition cost is
less than the value determined as hereinbefore provided. :

+(5) Real estate required by foreclosure or by deed in lieu thereof, in the
absence of a recent appraisal deemed by the Commissioner to be reliable, shall
not be valued at an amount greater than the unpaid principal of the defautted
loan at the date of such foreclosure or deed, together with any taxes and
expenses paid or incurred by such insurer at such time in connection with such
acquisition, and the cost of additions or improvements thereafter paid by such

insurer and any amount or amounts thereafter paid by such insurer on any

assessments levied for improvements in connection with the property.

(6) Purchase money mortgages received on dispositions of real property
held pursuant to section fone hundred ninety-eight] shall be valued in an amount
equivalent to ninety per centum of the value of such real property. Purchase
money mortgages received on disposition of real property otherwise held shall be
valued in an amount not exceeding ninety per centum of the value of such real
property as determined by an appraisal made by an appraiser at or about the
time of disposition of such real property.

“(1) The stock of 2 subsidiary of an insurer shall be valued on the basis of
the greater of (i) the value of only such subsidiary of the assets of such
subsidiary as would constitute lawful investments for the insurer if acquired or
held directly by the insurer or (i) such other value determined pursuant to
standards and cumulative limitations, contained in a regulation to be promulgated
by the Commissioner.

“(8) Notwithstanding any provision contained in this section or elsewhere
in this chapter, if the Commissioner find that the interests of policyholders so
permit or require, he may permit or require any class or classes of insurers
authorized to do business in this country to value their investments or any class
or classes thereof as of any date heretofore or hereafter in accordance with any
applicable valuation or method.”

SEC, 47. The old Section 209 of The Insurance Code, as amended, is hereby

renumbered as Section 213.

SEC. 48. Section 210 of The Insurance Code, as amended, is hereby

renumbered as Section 214 and amended to read as follows:

"Sec, 214. Every life insurance company, doing business in the
Philippines, shall annually make a valuation of ail policies, additions thereto,

unpaid dividénds,-and all other obligations outstanding on the thirty-first day of



December of the preceding year. All such valuations shall be made according to
the standard adopted by the company, as prescribed by the Commissioner in
accordance with internationally accepted actuarial standards, which standard
shall be stated in its annua! report.

“Such standard of valuation shall be according to a standard table of
mortality with interest at not more than six per centum compound interest, When
the preliminary term basis is used, the term insurance shall be limited to the first
policy year. ‘

“The results of such valuations shall be reported to the Commissioner on
or before the thitieth day of April of each year accompanied by a swom
statement of the company's actuary certifying to the figures and stating upon
what mortality table it is based, upon what rate of interest the valuation is made,
and the methods used in arriving at the result obtained.”

SEC. 49. The old Section 211 of The insurance Coda, as amended, is hereby
renumbered as Section 212 and the sections subsequent thereto are accordingly
renumbered until Section 218, which shall be renumbered as Section 222.

SEC. §0, Section 219 of The Insurance Code, as amended, is hereby
renumbered as Section 223 and amended to read as follows:

“Sec. 223. Any insurance company doing business in the Philippines
desiring to cede their excess risks to foreign insurance or reinsurance companies
not authorized to transact business in the Philippines may do so under such
terms and conditions which the Commissioner may prescribe.

*Shouia any reinsurance agreement be for any mason canened of terminated, the ceding company concemed sha
Jnfoem the Commissioner in weling of such cancellation or Wemination witun mirty days ram the date of such capcetiion
Cr tamination oF from the date neti ar informanen of such cancetation or teermaton is received by such company as
the case may be"

SEC. 51. Section 220 of The Insurance Code, as amended, is hereby
renumbered as Section 224 and amended to read as follows:

“Sec. 224. Every insurance company authorized to do business in the
Philippines shall report fo the Commissioner on forms prescribed by him the

particulars of reinsurance treaties or any new treaties or changes in existing

treaties within six months from their effectivity.”



SEG. 52. The old Section 221 of The Insurance Code, as amended, is hareby

renumbered as Section 225 and the sections subsequent thereto are accordingly
renumbered until Section 224, which shall be renumbered as Section 228.

SEC. 53. Section 225 of The Insurance Code, as amended, is hereby

renumbered as Section 229 and amended to read as follows:

“See. 229. Within thirty days after the approval of the Board of Directors, every
insurance company doing business in the Philippines shall publish in a
newspaper of general circulation a sypnasis of its audited annual financial
statements showing fully the conditions of its business and setting forth its
resources and liabilities, in accordance with such form prescribed by the
Commissioner.”

SEC. 54. A new Section 230 of The Insurance Code, as amended, is hereby

added to read as follows:

“Sec. 230. The Commissioner shall have the authority to make, amend,
and rescind such accounting rules and regulations as may be necessary to carry
out the provisions of this Code, and define accounting, technical and trade terms
used in this Code, provided that such shall be in accordance with internationally
accepted accaunting standards. Among other things, the Commissioner may
prescribe the form or forms in which required information shall be set forth, the
items or details to be shown in the balance sheet and income statement, and the
methods to be followed in the preparation of accounts, appraisal or valuation of
assets and liabilities, determination of recurring and nonrecurring income,
differentiation of investment and operating income, and in the preparatian, where
the Commissioner deems it necessary or desirable, of consolidated balance
sheets or income accounts of any person directly or indirectly controlling or
controlled by the insurance company.”

SEC. 58. The old Section 226 of The Insurance Code, as amended, is hereby

renumbered as Section 231 and the sections subsequent thereto are accordingly
renumbered until Section 227, which shall be renumbered as Section 234

SEC. 56. Section 228 of The Insurance Code, as amended, is hereby
renumbered as Section 232 and its paragraphs (g) and (i) are hereby amended to read



“(g) A provision that the insurer will issue to the policyholder for delivery to
each perscn insured a statement as to the insurance protection to which he is
entitled, to whom the insurance benefits are payabie, and the rights set forth in
"and

paragraphs (h), (i) and {j) followin,

“{i) A provision that if the group policy terminates or is amended sa as to
terminate the insurance of any class of insured persons, every person ineured
thereunder al the date of such termination whose insurance terminates and who
has been so insured for five years prior te such termination date shall be entitled
to have issued to him by the insurer an individual policy of life insurance subject
to the same limitations as set forth in paragraph (h), except that the group policy
may provide that the amount of such individual policy shall not exceed the
amount of the person's life insurance protection ceasing;”

SEC. 57. The old Section 229 of The Insurance Code, as amended, is hereby
renumbered as Section 233 and the sections subsequent thereto are accordingly
renumbered until Section 244, which shait be renumbered as Section 248.

SEC. 58. A new Section 249 of The Insurance Code, as amended, is hereby

added to read as follows:

“Sec, 249. Itis unlawful to: a) present or cause to be presented any false or
fraudulent claim for the payment of a loss under a contract of insurance; and b)
prepare, make or subscribe any writing with intent to present or use the same, or
to allow it to be presented or used in support of any such claim. Any person who
violates this section shall be punished by a fine not exceeding twice the amount
claimed or imprisonment of five years or both at the discretion of the Court”

SEC. 59. The old Section 245 of The Insurance Code, as amended, is hereby
renumbered as Section 250 and the sections subsequent thereto are accordingly
renumbered until Section 247, which shall be renumbered as Section 252.

SEC, 60. Section 248 of The Insurance Code, as amended, is hereby
renumbered as Section 253 and a new last paragraph is added to read as follows.

“No insurance company, life or non-life, or any professional reinsurer, ordered to.

be liquidated by the Commissioner under the provisions hereunder may be

25


rehabilitated or authorized to transact anew, insurance or reinsurance business,

as the case may be.”

SEC. 64. The old Section 249 of The Insurance Code, as amended, is hereby
renumbered as Section 254 and the sections subsequent thereto are accordingly

renumbered until Section 270, which shail be renumbered as Section 276.

SEC. 62, Section 271 of The Insurance Code, as amended, is hereby
renumbered as Section 277 and its paragraphs (4) and (8) are amended to read as
follows:

*{4) The presence in person or by proxy of five per cenfum af the members
entitled to vote at any meeting shail conslitute a quorum for the transaction of
business, including the amendment of the Articles of incorporation and/or the by-
laws, unless otherwise provided by the by-laws.” and

*(8) All insurers mutualized under the provisions of this chapter shall be subject
to ail other applicable provisions of this Code. The provisions of the Corporation

Code shall apply in a suppletory manner.”

SEC. 63. The old Section 272 of The Insurance Code, as amended, is hereby
renumbered as Section 278.

SEC. 64. A new Section 279 of The Insurance Code, as amended, is hereby
added to read as follows:

“Sec. 279. A domestic mutual life insurance company doing business in the
Philippines may convert itself into an incorporated stock life insurance company
by demutualization. To that end, it may provide and carry out a plan for the
conversion by complying with the requirements of this Title.

“The conversion of a domestic mutual life insurance company to an
incorporated stock life insurance company shall be carried out pursuant to a
conversion plan duly approved by the Commissioner.

“The Commissioner shail promulgate such rules and regulations as he or
she may deam necessary to cary out the provisions of this Tile, after due
consultation with representatives of the insurance industry

26


“All converted insurers under the provisions of this Title shall be subject to all
other applicable provisions of Code. The pravisions of the Corporation Cade
shail apply in a suppletory manner.”

SEC. 65. The oid Section 273 of The Insurance Code, as amended, is hereby
renumbered as Section 280 and the sections subsequent thereto are accordingly
renumbered until Section 275, which shall be renumbered as Section 282.

SEC. 66. Section 276 of The Insurance Code, as amended, is hereby
renumbered as Section 283 and amended ta read as follows:

“Sec. 283. The Commissioner shall cause an examination of the books and
records of the withdrawing company, and if, upon such examination, the
Commissioner finds that the insurer has ne outstanding liabilities to policyholders
and ereditors in the Philippines, and no policies uncanceiled; or its primary
liabilities have not been reinsured and assumed by another insurance company
authorized to transact business in the Philippines, as required in the preceding
section, it shall cancel the withdrawing company's certificate of authority, if
unexpired, and shall pemnit the insurer to withdraw. The cost and expenses of all
such examination shall be paid as prescribed in section (four hundred

seventeen].

SEC. 67. The old Section 277 of The Insurance Code, as amended, is hereby
renumbered as Section 284 and the sections subsequent thereto are accordingly
renumbered until Section 279, which shail be renumbered as Section 286.

SEC. 68. Seclion 280 of The Insurance Cade, as amended, is hereby
renumbered as Section 287 and amended to read as follows:

“Sec. 287. Except as otherwise provided in this Code, no person,
partnership, association or corporation shall transact any business in the
Philippines as a professional reinsurer until it shall have abtained a certificate of
authority for that purpose from the Commissioner upon the application therefor
and payment by such person, partnership, association or corporation of the fees
hereinafter prescribed. As used in this Code, the term “professional reinsurer”
shall mean any person, partnership, association of corporation that transacts
solely and exclusively reinsurance business in the Philippines.

aw


“The Commissioner may refuse to issue a certificate of authority to any
partnership, association or corporation if, in his judgment, such refusal will best
promote public interest. No such certificate of authority shall be granted to any
such partnership, association or corporation unless and until the Commissioner

shall have satisfied himself by such examination as he may make and such
evidence as he may require that such partnership, association or corporation is
qualified by the laws of the Philippines to transact business therein as a
professional reinsurer.

“Before issuing such certificate of authority of the Commissioner must be
satisfied that the name of the applicant is not that of any other known company
transacting insurance or reinsurance business in the Philippines, or a name so
similar as to be calculated to misiead the public.

“The certificate of authority shall be valid unless sooner revoked of
cancelled by the Commissioner,

“Every such partnership, association, or corporation receiving such
certificate of authority shall be subject to the provisions of this Code and other
related laws, and to the jurisdiction and supervision of the Commissioner.”

SEC, 69. Section 281 of The Insurance Code, as amended, is hereby
renumbered as Section 288 and amended to read as follows:

“Sec. 288. Any partnership, association, or corporation authorized to
transact solely reinsurance business must have a capitalization of at least two
billion pesos, paid in cash, of which at least fifty per centum consists of paid-up
capitat and the remaining partion thereof as contributed surplus, which in no case
shall be less than four hundred million pesos or such capitalization as may be
determined by the Secretary of Finance, upon the recommendation of the
Commissioner; Provided, That twenty-five per centum af the paid-up capital must
be invested in securities satistactory to the Commissioner, consisting of bonds or
other evidences of debt of the Government of the Philippines or its political
subdivisions or instrumentalities, or of government-owned or controlled
corporations and entities, including the Bangko Sentral ng Pilipinas, and
deposited with the Commissioner, and the remaining seventy-five per centum in
such other securities as may be allowed and permitted by the Commissioner,
which securities shall at ail times be maintained free from any lien or
Provided, That the aforesaid capital requirement is without
prejudice to other requirements to be imposed under any risk-based capital
method that may be adopted by the Commissioner: Provided, Finally, That the

encumbrance:

28


provisions of this chapter applicable to insurance companies shall so far as

practicable be likewise applicable to professional reinsurers.”

SEC. 70. The oid Section 282 of The Insurance Code, as amended, is hereby
renumbered as Section 289 and the sections subsequent thereto are accordingly
renumbered until Section 298, which shall be renumbered as Section 305.

SEC. 71. Section 299 of The Insurance Code, as amended, is hereby

renumbered as Section 306 and its second paragraph is amended Io read as follows:

“No insurance company doing business in the Philippines, nor any agent
thereof, shall pay any commission or other compensation to any person for
services in obtaining insurance, unless such person shall have first procured
from the Commissioner a license to act as an insurance agent of such company
or as an insurance broker as hereinafter provided. An insurance agent is an
independent contractor and not an employee of the company represented.
“Insurance agent’ includes agency leader, agency manager, or their equivalent.

“No person shall act as an insurance agent or as an insurance broker in the
solicitation or procurement of applications for insurance, or receive for services in
cbtaining insurance, any commission or other compensation from any insurance
company doing business in the Philippines, or any agent thereof, without first
procuring a license to act from the Commissioner, which must be renewed every
five years thereafter. Such license, which shall ipso facto expire upon termination
of the agent's agreement with the insurance company, shall be issued by the
‘Commissioner only upon the written application of the person desiring it, such
application if for a license to act as insurance agent, being approved and
countersigned by the company such person desires to represent, and shall be
upon a form prescribed by the Cammissioner giving such information as he may
require, and upon payment of the corresponding fee hereinafter prescribed. The
Commissioner shall satisfy himseif as to competence and trustworthiness of the
applicant and shall have the right to refuse to issue or renew and to suspend or

revoke any such license in his discretion.”

SEC. 72. A new Section 299-A of The Insurance Code, as amended, is hereby

added to read as follows:
“The provisions af Sections 299 and 300 shall apply to an employee who

shall be engaged to sell insurance products by an insurance company

29


“Since the insurance industry is imbued with public interest, the insurance
companies upon approval of the Commission may exercise wide latitude in
supervising the activities of their insurance agents to ensure the protection of the

insuring publi
SEC, 73. The old Section 300 of The Insurance Code. as amended, is hereby

renumbered as Section 307 and the sections subsequent thereto are accordingly
renumbered until Section 316, which shall be renumbered as Section 323.

SEC, 74. Section 317 of The Insurance Code, as amended, is hereby
renumbered as Section 324 and its first paragraph is amended to read as follows:

“A certificate of registration issued to a resident agent shall expire on the thirtieth
day of June of the fifth year following its issuance unless it is renewed.”

SEC, 75, The old Section 318 of The Insurance Code, as amended, is hereby
renumbered as Section 325 and the sections subsequent thereto are accordingly
renumbered until Section 327, which shall be renumbered as Section 334.

SEG. 76. Section 328 of The insurance Code, as amended, is hereby
renumbered as Section 335 and amended to read as follows:

“Sec. 335. Any adjusters license issued hereunder shall be valid until after the
thirtieth day of June of the fifth year following the issuance of such license unless
itis renewed; Provided that, such license shall ipso facto expire upon termination
of the independent adjuster’s agreement with the insurance company, or of the

public adjuster’s agreement with the insured, as the case may be.”
SEC. 77. The old Section 329 of The Insurance Code, as amended, is hereby
renumbered as Section 336 and the sections subsequent thereto are accordingly

renumbered until Section 335, which shall be renumbered as Section 342.

SEC. 78. Section 336 of The Insurance Code, as amended, is hereby
renumbered as Section 343 and its second paragraph is amended to read as follows:

“No certificate of registration issued under this title shall be valid after the thirtieth
day of June of the fifth year following its issuance unless it is renewed.”

30


SEG. 79. The old Section 337 of The Insurance Code, as amended, is hereby
renumbered as Section 344 and the sections subsequent thereto are accordingly
renumbered until Section 364, which shail be renumbered as Section 371

SEC. 80. A new Section 372 of The Insurance Code, as amended, is hereby
added to read as follows:

“See. 372. The Commissioner, in consultation with the duly accredited
associations representing the insurance industry, shall adopt and promulgate @
code of conduct to promote integrity, honesty and ethical business practices
among insurance agents, distributors and other intermediaries.”

SEC. 81. A new Title on Bancassurance and Sections 373 to 375 of The
Insurance Code, as amended, are hereby added to read as follows:

“Title 9
“BANCASSURANCE

“Sec. 373. The ten “bancassurance” shail mean the presentation and
sale to bank customers by an insurance company of its insurance products within
cor outside the premises of the head office of such bank duly licensed by the
Bangko Sentrai ng Pilipinas or any of its branches under such rules and
regulations which the Commission may promulgate. To engage in
bancassurance, the bank is not required to have equity ownership of the
insurance company. No insurance company shall engage in the business of
bancassurance unless it possesses all the requirements as may be prescribed by
the Commission.

*No insurance product under this Section, whether life or non-life, shali be
issued or delivered unless in the form previously approved by the Commission.

“Seo. 374. Personnel tasked to present and seil insurance products within

the bank premises shall be duly licensed by the Commission and shall be subject
to the rules and regulations of this Act.

a


“Sec. 375. The Commis
Pilipinas, shall promulgate rules and regulations to effectively supervise the

ion, in coordination with the Bangke Sentral ng

business of bancassurance.”

SEC. 82. Chapter of the Insurance Code, “Security Fund”, consisting of Sections
365 up to 372 is hereby deleted.

SEC. 83. The old Section 373 of the Insurance Code, as amended, is hereby
renumbered as Section 376 and the sections subsequent thereto are accordingly
renumbered until Section 412, which shall be renumbered as Section 415.

SEC. 84. Section 413 of The Insurance Code, as amended, is hereby
renumbered as Section 424 and amended to read as follows:
“Sec. 416. All trustees shall, before entering in the performance of the
duties of their trust, obtain a certificate of registration from the Commissioner.
“Ail provisions of this Code governing mutual benefit associations and
such other provisions herein, whenever practicable and necessary. shail be
applicable to trusts for charitable uses.”

SEC. 85. A new Section 425 of The Insurance Code, as amended, is hereby
added to read as follows:
“Sec. 417. The treasurer of @ charitable trust shall file a fidelity bond in the
amount commensurate with the value of the trust property in his custody, as may
be determined by the Commissioner.”

SEC. 86. A new Chapter an Trust Business in General and Section 418 to 422
of The Insurance Code, as amended, are hereby added to read as follows,

“Chapter VIN
“TRUST BUSINESS IN GENERAL

“Sec. 418. An insurance company duly authorized by the Insurance
Commission may engage in trust business, which lust business shall be separate
and distinct from the general business of the insurance company, without need of
nas. The insurance company

securing a license from the Bangko Sentral ng Pil
shall act as a trustee or administer any trust or hold property in trust or on deposit for
the use, benefit, or behoof of others. For purposes of this Act, such separate, distinct
and duly authorized trust business shall be referred to as a trust entity.

32


*Sec. 419. A trust entity shall administer property under its custody with
the diligence that a prudent man would exercise in the conduct of an enterprise
of a like character and with similar aims. No trust entity shall, for the account of
the trustor or the beneficiary of the trust, purchase or acquire property from, or
sell, transfer, assign or lend money or property to, or purchase debt instruments

of, any of the departments, directors, officers, stockholders, or employees of the
trust entity, relatives within the first degree of consanguinity or affinity, or the
related inlerests, of such directors, officers and stockholders, unless prior to the
transaction, such transaction is specifically authorized by the trustor and the
relationship between the trustee and the other party involved in the transaction is
fully disclosed to the trustor or beneficiary of the trust, The Insurance
Commission shalt promulgate such rules and regulations as may be necessary to
regulate the conduct of trust business by insurance companies.

“Sec. 420. The trust business and all funds, properties or securities

received by any trust entity as executor, administrator, trustee, receiver, or

depositary shall be kept separate and distinct from the general business of the
insurance compeny, or allied insurance company inctuding ali other funds,
properties, and assets of such trust entity. The accounts of all such funds,
properties, or securities shall likewise be kept separate and distinct from the
accounts of ihe general business of the Irust entity.

“Sec, 421. Unless otherwise directed by the instrument creating the trust,
the lending and investment of funds and other assets acquired by a trust entity as
executor, administrator, or trustee, shall be limited to loans or investments as
may be prescribed by law, and/or the insurance Commission.

“Sec. 422. No assets held by a trust entity in its capacity as trustee shall
be subject to any claims other than those of the parties interested in the specific

trusts.”

SEC. 87. Anew Chapter on Registration, Responsibilities and Oversight of Self-
Regulatory Organizations and Sections 423 to 429 of The Insurance Code, as
amended, are hereby added to read as follows:

“Chapter IX

33


"REGISTRATION, RESPONSIBILITIES AND OVERSIGHT OF SELF-
REGULATORY ORGANIZATIONS

“Sec. 423. The Commissioner shall have the power to register as a self-
regulatory organization, or otherwise grant licenses, and to regulate, supervise,
examine, suspend or otherwise discontinue, as a condition for the operation of
organizations whose operations are related to or connected with the insurance
market such as but net limited to associations of insurance companies, whether
life or norelife, reinsurers, actuaries, agents, brokers, dealers, mutual benefft
associations, trusts, rating agencies, and other persons regulated by the
‘Commissioner, which are engaged in the business regulated by this Code.

“The Commissioner may prescribe rules and regulations which are
necessary or appropriate in the public interest or for the protection of investors to
govem self-regulatory organizations and other organizations licensed or
regulated pursuant to the authority granted in hereunder, including but net limited
to the requirement of cooperation within and among all participants in the
insurance market to ensure transparency and facilitate exchange of information.

“Sec, 424. An association cannot be registered as a self-regulatory
organization unless the Commissioner determines that:

*(a) The association is so organized and has the capacity to be able to
cary out the purposes of this Code and to comply with, and to enforce
compliance by its members and persons associated with its members, with the
provisions of this Code, the rules and reguiations thereunder, and the rules of the
association.

“(v) The rules of the association, notwithstanding anything in the
Corporation Code to the contrary, provide that:

@ Any entity possessing the qualifications set out in the rules and none of
the disqualifications may become a member of the association;
‘There exists a fair representation of its members to serve on the Board of

Directors of the association and in the administration of its affairs, and that
any natural person associated with a juridical entity that is a member shall
himself be deemed to be a member for this purpose;
Gi) The Board of Directors of the association includes in its compesition: (a)
the president of the association and (b) at feast 2 independent directors;
(iv) For the equitable allocation of reasonable dues, fees, and other charges
among members and other persons using any facility or system which the

association operates or controls;

34


(v) For the prevention of fraudulent and manipulative acts and practices, the
promotion of just and equitable principles of business, and, in general, the
protection of the insuring public;

(vi) That its members and persons associated with its members shall be
appropriately disciplined for violation of any provision of this Code, the
rules or regulations thereunder, or the rules of the association;

(vi) That a fair procedure for the disciplining of members and persons
associated with members, the denial of membership fo any person
seeking membership therein, the barring of any person from becoming
associated with @ member thereof, and the prohibition or fimitation by the
association of any person with respect to access to services offered by the
association or a member thereof.

“Sec. 425. A self-regulatory organization may examine and verify the

qualifications of an applicant to become a member in accordance with

procedures established by the rules of the: association.

“A self-regulatory organization shall deny membership or condition the
membership of, an entity, if the entity:

(i) Does not mest the standards of financial responsibility, operational
capability, training, experience, o competence that are prescribed by the
rules of the association; or

(i) Has engaged, and there is a reasonable liketihood it wil again engage, in
acts or practices inconsistent with just and equitable principles of fair
trade.

“A self-regulatory organization may deny membership to an entity not engaged in

a type of business in which the rules of the association require members to be

engaged.

“Sec 426. Upon the filing of an application for registration as a self-
regulatory organization under this Tite, the Commissioner shall have ninety (80)
days within which to either grant registration or institute @ proceeding to
determine whether registration should be denied. in the event proceedings are
instituted, the Commissioner shall have two hundred seventy (270) days within
which to conclude such proceedings at which time it shall, by order, grant or deny
such registration,

“Sec, 427, Every self-regulatory organization shall comply with the
provisions of this Code, the nules and regulations thereunder, and its own rules,

and enforce compliance therewith, notwithstanding any provision of the
Corporation Code to the contrary, by its members, persons associated with its

members ar its participants

38


“Sec, 428. Each self-regulatory organization shall submit to the
Commissioner for prior approval any proposed rule or amendment thereto,
together with a concise statement of the reason and effect of the proposed
amendment.

“Within sixty (60) days after submission of a proposed amendment, the
Commissioner shall, by order, approve the proposed amendment. Otherwise, the
same may be made effective by the self-regulatory organization

sin the event of an emergency requiring action for the protection of the
insuring public, a self-regulatory organization may put a proposed amendment
into effect summarily: Provided, however, That a copy of the same shall be
immediately submitted to the Commissioner.

“The Commissioner is further authorized, if after making appropriate
request in writing to a self-regulatory organization that such organization effect
‘on its own behalf specified changes in its rules and practices and, after due
notice and hearing it determines that such changes have net been effected, and
that such changes are necessary, by rule or regulation or by order, may alter,
abrogate or supplement the rules of such self-regulatory organization in so far as
necessary or appropriate to effect such changes in respect of such matters as

“(a) Safeguards in respect of the financial responsibility of members
and adequate provision against the evasion of financial responsibility through the
use of corporate forms or special partnerships,

“() The supervision of market practices;

*(c)__ The manner, method, and place of soliciting business;

“{4}_ The fixing of reasonable rates of fees, interest, listing and other
charges, but not rates of comimission; and self-regulatory organization

“(e) The supervision, ausiting and disciplining of members

“In addition to the general powers of the Commissioner over the entities
under his er supervision, the Commissioner, after due notice and hearing. is
authorized, in the public interest and to protect insuring public:

“(a) To suspend for a period not exceeding twelve (12) months or to
revoke the registration of a self-regulatory organization, or to censure or impase
limitations on the activilies, functions, and operations of such self-regulatory
organization, if the Commission finds that such a self-regulatory organization has
willfully violated or is unable to comply with any provision of this Code or of the
rules and regulations thereunder, or ils own rules, of has failed to enforce
compliance therewith by a member of, person associated with a member, or a

participant in such self-regulatory organization,


"(b) To expel from a self-regulatory organization any member thereof or
any participant therein who is found to have willfully violated any provision of this
Code or suspend for a period not exceeding twelve (12) months for violation of
any provision of this Code or any other laws administered by the Commission, or
the rules and regulations thereunder, or effected, directly or indirectly, any
transaction for any person who, such member or participant had reason to
believe, was violating in respect of such transaction any of such pravisions; and

“(c) To remove from office or censure any officer or director of a self-
regulatery organization if it finds that such officer ar director has violated any
provision of this Code, any other law administered by the Commissioner, the
rules or regulations thereunder, or the rules of such self-regulatory organization,
abused his authority, or without reasonable justification or excuse has failed ta
enforce compliance with any of such provisions.

“Sec, 429. (a) A self-regulatory organization is authorized to discipline a
member of or participant in such self-regulatory organization, or any person
associated with a member, including the suspension or expulsion of such
member or participant, and the suspension or bar from being associated with a
member, if such person has engaged in acts or practices inconsistent with just
and equitable principles of faimess or in willful violation of any provision of the
Code, any other law administered by the Commission, the rules or regulations
thereunder, or the rules of the self-regulatory organization. In any disciplinary
proceeding by a self-regulatory organization (other than a summary proceeding
pursuant to paragraph {b) of this subsection) the self-regulatory organization
shall bring specific charges, provide notice to the person charged, afford the
person charged with an opportunity to defend against the chages, and keep a
record of the proceedings. A determination to impose a disciplinary sanction shall
be supported by a written statement of the offense, a summary of the evidence
presented and a statement of the sanction imposed.

“{(p) A self-regulatory organization may summarily: (I) suspend a
member, participant or person associated with a member who has been or is
expelled or suspended from any other self-regulatory organization; or (ti)
suspend a member who the self-regulatory organization finds to be in such
financial or operating difficulty that the member or participant cannot be permitted
to continue to do business as a member with safety to investors, creditors, other
members, participants or the self-regulatory organization: Provided, That the self-
regulatory organization immediately notifies the Commission of the action taken.
Any person aggrieved by a summary action pursuant to this paragraph shalt be
promptly afforded an opportunity for a hearing by the association in accordance

a7


with the provisions of paragraph (a) of this subsection. The Commissioner, by
order, may stay a summary action on its own motion or upon application by any
person aggrieved thereby, if the Commissioner determines summarily of afier
‘due notice and hearing (which hearing may consist solely of the submission of
affidavits or presentation of oral arguments) that a stay is consistent with the
public interest and the protection of the insuring public.

(0) A self-regulatory organization shall promptly notify the, Commission of
any disciplinary sanction on any member thereat or participant tharein, any denial
of membership or participation in such organization, of the imposition of any
disciplinary sanction on @ person associated with @ member oF & bar of such
person from becoming so associated. Within thirty (30) days offer such notice,
any aggrieved person may appeal to the Commissioner from, or the
Commissioner on its own motion within such period, may institute review of, the
decision of the self-regulatory organization, at the conclusion of which, after due
notice and hearing (which may consist solely of review of the record before the
self-regulatory organization}, the Commissioner shall affirm, modify oF set aside
the sanction, In such proceeding the Commissianer shall determine whether the
aggrieved person has engaged or omitted to engage in the gels and practices as
found by the self-regulatory organization, whether such acts and practices
constitute wilful violations of this Code, any other law administered by the
Commission, the rules or regulations thereunder, or the rules of the self
regulatory organization as specified by such organization, whether such
provisions were applied in a manner consistent with the purposes of this Code,
and whether, with due regard fer the public interest and the protection of

investors the sanction is excessive or oppressive."

SEG. 88. A new Chapter on Confidentiality and a new Section 430 of The
insurance Code, as amended, are hereby added to read as follows:

“Chapter X
“CONFIDENTIALITY

“sec. 430. All life insurance companies doing business in the Philippines
are hereby required to inform persons applying for life insurance 3S well as
persons proposed for insurance that as part of the underwriting procedure, @
teport may be obtained by the insurance company that will provide it with
applicable and relevant information regarding the person's health, mode of living.
and other personal background as gathered from the person himself, from the

38


results of any required physical examination, from the reports obtained from
physicians or other medical personnel, institutions or facies where the person
nad been attended, or, in general, from any other sources

All these information in relation to the person's insurabillty shall be treated
‘as confidentiat and shall not be disclosed by the life insurance company, its
directors, officers, employees, agents, brokers, of other business partners, in any
form or manner, unless otherwise required by taw, by lawful order of a Court of
competent jurisdiction, or upon the written permission of the person himself,
provided, however, that the insurance company may release information in its fle
to other life insurance companies to whom the person may apply for life, accident
‘ar health insurance, or to whom a claim for benefits may be submitted.”

SEG. 89. A new Chapter on Taxation and a new Section 43% of The Insurance
Code, as amended, are hereby added to read as follows:

“Chapter XI
“TAXATION

“Sec, 431. The death benefits received under a life insurance policy shall

be exempt from all taxes.”

SEC. 90. Chapter Vill on The Insurance Commissioner of The Insurance Code,
as amended, is hereby renumbered as Chapter XII.

SEC. 91, Section 414 of The Insurance Code, as amended, is hereby
renumbered as Section 432 and amended to read as follows:

“Sec, 432, The Insurance Commissioner shall have the duty to see that all
laws ‘relating to insurance, insurance companies and other insurance matters,
mutuat benefit associations, and trusts for charitable uses are faithfully executed
and to perform the duties imposed upon him 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 [hwo hundred thirty-two] and to provide for the licensing of persons selling
such contracts, and to issue such reasonable rules and regulations governing the
same.

“the Commissioner may issue such rulings, instructions, circulars, orders

and decision as he may deem necessary to secure the enforcement of the

39


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, subject to the approval of the Secretary of Finance. Except as otherwise
specified, decisions made by the Commissioner shall be appealable to the

Secretary of Finance.

“In addition to the foregoing. the Commissioner shall have the following
powers and functions:

“a) Formulate policies and recommendations on issues conceming the
insurance industry, advise Congress and other government agencies on all
aspects of the insurance industry and propose legislation and amendments
thereto;

“p) Approve, reject, suspend revoke or require amendments to registration
and licensing applications provided for by this Code;

*c) impose sanctions for the violation of laws and the rules, regulations
and orders issued pursuant thereto;

“d) Prepare, approve, amend or repeal rules, regulations and order, and
issue opinions and provide guidance on and supervise compliance with such
rules, regulations and orders;

“e) Enlist and aid and support of and/or deputize any and ail enforcement
agencies of the Government, civil ar military as well as any private institution,
comoration, fim, association or person in the implementation of its powers and
functions under this Code;

“p Issue cease and desist orders to prevent fraud oF injury to the insuring
public;

*g) Punish for contempt of the Commission, both direct and indirect. in
accordance with the pertinent provisions of and penalties prescribed by the Rules
of Court,

“hy Compel the officers of any registered insurance corporation or
association to call meetings of stockholders or members thereof under its

supervisions;


“i) Issue subpoena duces tecum and summon witnesses to appear in any
proceedings of the Commission and in appropriate cases, order the examination,
search and seizure of all documents, papers, files and records, tax returns, and
books of accounts of any entity or person under investigation as may be
necessary for the proper disposition of the cases before it, subject to the
provision of existing laws; .

*f) Suspend or revoke, afler proper notice and hearing the license or
certificate of authority of any enlity or person under its regulation, upon any of the
grounds provided by law;

“k) Conduct of examination to determine compliance with faws and
regulations if the circumstances so warrant as determined by appropriate rules
and regulations;

“1) Regular investigation which shall not be oftener than once a year from
the last date of examination to determine whether an institution is conducting its
business on a safe an sound basis; Provided, That, the deficiencies/rregulanities
found by or discovered by an audit shall be immediately addressed;

“m) Inquire into the solvency and liquidity of the institutions under its
supervision and enforce prompt corrective action; and

“i Exercise such other powers as may be provided by law as weil as
those which may be implied from, or which are necessary oF incidental to the
camying out of, the express powers granted the Commission to achieve the
objectives and purposes of these laws."

SEC. 92, The old Section 415 of The Insurance Code, as amended, is hereby
renumbered as Section 433 and the sections subsequent thereto are accordingly
renumbered until Section 424, which shail be renumbered as Section 442.

SEC. 93. This Act shall also amend the section numbers referred to in The

Insurance Code to reflect the renumbering resulting from the amendments brought
about by this Act.

44


SEC. 94, Separability Clause. if any provision or part hereof, is held invalid or
unconstitutional, the remainder of the law or the provision not otherwise affected shalt

remain valid and subsisting.

SEC. 95. Repealing Clause. All laws, decrees, orders, rules and regulations or

parts thereof, inconsistent with this Act are hereby amended or modified accordingly.
SEC. 96. Effectivity. This Act shall take effect fifteen (15) days following the
completion of its publication in the Official Gazette or in two (2) national newspapers of

general circulation.

Approved,

42


FIFTEENTH CONGRESS OF THE -- —)
REPUBLIC OF THE PHILIPPINES, )

First Regular Session }
HOUSE OF REPRESENTATIVES
H.No,__ 26°72

Introduced by Teodorico T, Haresco Jr.

EXPLANATORY NOTE

in 2009, Typhoon “Ondoy” and *Pepeng" claimed not only hundreds of lives, but also
destroyed number of properties costing billions of pesos. in infrastructure alone, ‘Ondoy"
damaged Php 3.8 biion worth of properties, while damages brought by “Pepeng” amounted
lo Php 1.09 billion,

Consequently, insurance claims reached billions of pesos right after the devastating
typhoons. According to the National Insurance Commission (NIC) Commissioner Eduardo
Malinis, Philippine Insurers and Reinsurers Association (PIRA) estimated that there were
about Php 11 billion worth of property ctaims from the victims of the typhoons and another
Php 1 billion from motor vehicles.

Unfortunately, some insurance companies used the “Acts of God" clause in
insurance policy to avoid payments to insured car owners, leaving comprehensive
insurance ptan holders helpless in the midst of enormous josses, despite the fact that their
motor vehicles are covered by comprehensive insurance policy.

This bill seeks to propose that in case of a comprehensive motor vehicle insurance,
no policy shall be issued and delivered in the Philippines unless it contains in substance the
provision that comprehensive motor vehicle insurance shail cover all fortuitous events, such
as floods, landslides, typhoon, volcanic eruptions, earthquakes and other related natural
calamities provided that the accident, loss, damage or liability is directly or indirectly,
proximately or remotely occasioned by, contributed to by or traceable to, arising aut of, cr in
connection with the aforementioned natural events. Such inclusion of fortuitous events in
the comprehensive motor vehicle insurance shall be ‘subject to additional fees, as may be
prescribed by the Insurance Commission.

In view thereof, the passage of this bill is eamestly sought.

Ye he
TEQDORICO T. HARESCO JR.

Representative



FIFTEENTH CONGRESS OF THE )
REPUBLIC OF THE PHILIPPINES )
First Regular Session }

HOUSE OF REPRESENTATIVES
H.No.___ 2672

Introduced by Teadorico T. Haresco Jr.

AN ACT
AMENDING SECTION 385 OF PRESIDENTIAL DECREE NO. 1460, AS AMENDED BY
PRESIDENTIAL DECREE 1455, OTHERWISE KNOWN AS THE INSURANCE CODE OF
THE PHILIPPINES

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

SECTION 1. Section 385 of Presidential Decree 1480 otherwise known as the Insurance
Code, as amended by Presidential Decree 1458, is heteby amended to read as follows

“Section, 385, The insurance company Concerned shall forthwith ascertain the truth
and extent of the claim, and make payment within five working days after reaching, an
aareemenl. If no agreement is reached, the insurance company shall pay only the “no fauit*
indemnity provided in section three hundred saventy-eight without prejudice to the claimant
from pursuing his claim further, in which case, he shall not be required or compelled by the
insurance company to execute any quit-claim or document releasing il from Hability under
the policy or insurance or surety bond issued,"

IN CASE OF A COMPREHENSIVE MOTOR VEHICLE INSURANCE, NO POLICY
SHALL BE ISSUED AND DELIVERED tN THE PHILIPPINES UNLESS IT CONTAINS IN
SUBSTANCE, THE PROVISION THAT COMPREHENSIVE MOTOR VEHICLE
INSURANCE SHALL COVER ALL FORTUITOUS EVENTS, SUCH AS FLOODS,
LANDSLIDES, TYPHOON, VOLCANIC ERUPTIONS, EARTHQUAKES, AND OTHER
RELATED NATURAL CALAMITIES, PROVIDED THAT THE ACCIDENT, LOSS, DAMAGE
OR LABILITY IS DIRECTLY OR INDIRECTLY, PROXIMATELY OR REMOTELY
OCCASIONED BY, CONTRIBUTED TO BY OR TRACEABLE TO, ARISING OUT OF, OR
iN CONNECTION WITH THE AFOREMENTIONED NATURAL EVENTS.



SUCH INCLUSION OF FORTUITOUS EVENTS IN THE COMPREHENSIVE
MOTOR VEHICLE INSURANCE SHALL BE SUBJECT TO ADDITIONAL FEES, AS MAY
BE PRESCRIBED BY THE INSURANCE COMMISSION.

In case of any dispute in the enforcement of the provisions of any policy issued
Pursuant to this Chapter, the adjudication of such dispute shall be within the original and

valentin tenant eon , mete pines ne atte aU

hundred sixteen."

SECTION 2. Repealing Clause. All laws, executive orders, rules and regulations or any part
thereof inconsistent herewith are deemed repealed, modified or amended accordingly,
SECTION 3. Separabiffy Clause. In case any provision of this Act is declared
unconstitutional or invalid, the other provisions hereof which are not affected theraby shall
‘continue in full force and effect.
SECTION 4, Effectivity. - This Act shall take effect fifteen (15) days after its publication in
two (2) national newspapers of general circulation.

Approved,



Republic of the Philippines
HOUSE OF REPRESENTATIVES
Batasang Pambansa, Quezon City

FIFTEENTH CONGRESS
First Regular Session

HOUSE BILL NO. 2988

INTRODUCED BY REP. JOSEPH VICTOR G. EJERCITO

ee
EXPLANATORY NOTE

We have witnessed the costly devastation brought by strong typhoons
"Ondoy” and *Pepeng” to our people's lives and properties. Insurance
claims from water-logged motor vehicles reached billions of pesos. It
is, however, unfortunate that some insurance companies deliberately
resort to “Acts of God” clause in insurance policy to avoid payments to
insured car owners, ‘eaving comprehensive insurance plan holders
helptess in the midst of enormous fosses.

This is a deceptive policy of several insurance companies which refuses
to indemnify owners of motor vehides, despite the fact that their
motor vehicles are covered by comprehensive insurance policy.

This bill seeks to address this scenario by proposing an amendment to
the Insurance Code.

Under this legislative measure, it is proposed that in case of a
comprehensive motor vehide insurance, no policy shalt be issued and
delivered in the Philippines unless it contains in substance the
provision that comprehensive motor vehicle insurance shall cover all
fortuitous events, such as floods, landslides, typhoon, volcanic
eruptions, earthquakes and other related natural calamities provided
that the accident, loss, damage or liability is directly or indirectly,
proximately or remotely occasioned by, contributed to by or traceable
to, arising out of, or in connection with the aforementioned natural
events.

Such inclusion of fortuitous events in the comprehensive motor vehicle
insurance shall be subject to additional fees, as may be prescribed by
the Insurance Commission.

In view thereof, earnest approval of this bill is requested.



Republic of the Phitippines
HOUSE OF REPRESENTATIVES
Batasang Pambansa, Quezon City

FIFTEENTH CONGRESS
First Regular Session

HOUSE BILL NO, ___ 2983

INTRODUCED BY REP, JOSEPH VICTOR G. EJERCITO

AN ACT
AMENDING SECTION 385 OF PRESDENTIAL DECREE NO. 1460,
AS AMENDED BY PRESIDENTIAL DECREE 1455, OTHERWISE
KNOWN AS THE INSURANCE CQDE OF THE PHILIPPINES

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

SECTION 1. Section 385 of Presidential Decree 1460 otherwise
known as the Insurance Code, as amended by Presidential Decree
1455, is hereby amended to read as follows:

“Section 385. The insurance company concerned shall
forthwith ascertain the truth and extent of the claim and
make payment within five working days after reaching an
agreement. If no agreement is reached, the insurance
company shall pay only the "no fault indemnity provided
in section three hundred seventy-eight without prejudice
to the daimant from pursuing his daim further, in which
case, he shail not be required or compelled by the
insurance company to execute any quit-claim or document
releasing it from liability under the policy or Insurance or
surety bond issued.”

"IN CASE OF A COMPREHENSIVE MOTOR VEHICLE
INSURANCE, NO POLICY SHALL BE ISSUED AND
DELIVERED IN THE PHILIPPINES UNLESS IT CONTAINS IN
SUBSTANCE, THE PROVISION THAT COMPREHENSIVE
MOTOR VEHICLE INSURANCE SHALL COVER ALL
FORTUITOUS EVENTS, SUC AS FLOODS, LANDSLIDES,
TYPHOON, VOLCANIC ERUPTIONS, EARTHQUAKES, AND
OTHER RELATED NATURAL CALAMITIES; PROVIDED, THAT
THE ACCIDENT, LOSS, DAMAGE OR LIABILITY IS
DIRECTLY OR INDIRECTLY, PROXIMATELY OR REMOTELY
OCCASIONED BY, CONTRIBUTED TO_BY=QR- TRACEABLE

-TO, ARISING OUT OF, OR IN COI 1H THE
af ENTIONED NATURAL EVEI ong



"SUCH INCLUSION OF FORTUITOUS EVENTS IN THE
COMPREHENSIVE MOTOR VEHICLE INSURANCE SHALL BE
SUBJECT TO ADDITIONAL FEES, AS MAY BE PRESCRIBED
BY THE INSURANCE COMMISSION,

“In case of any dispute in the enforcement of the
provisions of any policy issued pursuant to this Chapter,
the adjudication of such dispute shall be within the original
and exclusive jurisdiction of the Commissioner, subject to
limitations provided in section four hundred sixteen.”

SEC 2. Repealing Clause. - All laws, executive orders, rules and
regulations or any part thereof inconsistent herewith are deemed
repealed, modified or amended accordingly.

SEC 3. Separability Clause. - In case any provision of this Act is
declared unconstitutional or invalid, the other provislons hereof which
are not affected thereby shall continue in full force and effect.

SEC 4, Effectivity. - This Act shall take effect fifteen (15) days after
its publication in the Official Gazette or in at feast two (2) newspapers
of general circulation.

Approved,



Republic of the Philippines RECEIVE

HOUSE OF REPRESENTATIVES meD DEC 2016.
Quezon City Tee: lor A
FIFTEENTH CONGRESS “tT
First Regular Session

House Bill No- 3797

Introduced by Honorable Representative
HERMILANDO I, MANDANAS
2™ pistrict, Batangas

AN ACT AMENDING PRESIDENTIAL DECREE NO. 612, AS
AMENDED, OTHERWISE KNOWN AS THE INSURANCE CODE, AS
‘AMENDED BY PRESIDENTIAL DECREE NOS, 1141, 1280, 1455,
i 1460, 1814 AND 1981, AND BATAS PAMBANSA BLG. 874, AND
! FOR OTHER PURPOSES

EXPLANATORY NOTE

This bill seeks to amend Presidential Decree No. 1460 (PD 1460) as
amended, otherwise known 2s “The Insurance Code of 1978". Thirty two
years of experience under the Insurance Code adopted in 1978 marked by
monumiental changes and development in the ‘world of commerce, trade
and industry have exposed the unsuitability of certain provisions of the
{nsurance Code and their inadequacies to address the ‘emerging issues in
the feld of Insurance and changing business climate in bath the domestic
and foreign markets, In the light of this development, it has become
imperative upon our fawmakers to attune our insurance laws to the
prevailing economic conditions if the insurance industry is to remain an

+ engine of economic growth.

‘A sound and efficent insurance industry is critical in promoting our
country’s financial growth and developing our national economy.
Insurance provides ecanomic protaction ‘and financiat security to the policy
Tisners and their dependents. Tt significantly contributes to capital market
development and savings mobilization which can be tapped to finance
various investments and other productive economic activities. It is an
efficent form of raising much needed capital to fuel our economy: and
provides a stable and rich source of long-term capital which is critical in
‘our national development. Its long term investments offer more ideal
source of financing that satisfy the needs of both. the public and the
private sector, Insurance products are vehicles for increasing our national
erated from the policy owners.



Its pension and retirement plans effidentiy supplement, if not substitute,
for the declining state-provided sociat security programs. In a Way, the
insurance indusby encourages and empowers the people to provide for
their own retirement instead of just relying on the govemment welfare
program and dole-outs. It is qitical that a healthy and stable insurance
industry is promoted and maintained to make it more dynamic and
responsive to the increasing needs ‘of our people and the demands of the
changing economic conditions.

In pursuing this major Jegislative initiative, it is our intenton to
formulate a legislative framework which shalt enable the insurance
industry to sufficiently cope with the new trends and challenges both in
the domestic and fareign insurance markets. Our objective is to enhance
the growth of the industy by maintaining a safe, sound and strong
industry which will enable the insurers to efficiently achieve their business
fends and expand their insurance activities that will further promote the
security, protection and interest of the Insuring public. This bill introduces
Significant changes to the present Code. However, despite the several
changes propased by this bill to ‘The Insurance Code of 1978, many
relevant provisions thereof which have served us well in the past are
retained. This legislative measure has also incorporated the relevant
circulars. and regulations issued by the Insurance Commission in the
course of its prudent regulation and supervision of the insurance industry.
We have also adopted new insurance activities and business madels such
as micro-insurance.and bank assurance to reflect current developments in
the industry. This bill is also introduce to further reinforce the authority of
the Insurance Commission to effectively pursue its mandate and prudently
perform its regulatory functions particularly in enhancing the interest of
the Insuring public. We strongly believe that legislative intervention and
structural reforms are needed to strengthen and revitalize the insurance
industry and make it a robust partner of our government in pursuing
economic development for the greater benefit of our people. Amending
the Insurance Code shall not only sustain the gains of the insurance
industry and accelerate its further growth but shall develop a strong
domestic insurance industry which can fairy compete with foreign insurers
once the ASEAN Economic Market is launched in 2015.

In View of the foregoing, the approval of this bill is earnestly
requested.

( HERMILANDO I. MANDANAS
2° District, Batangas



FIFTEENTH CONGRESS )
REPUBLIC OF THE PHILIPPINES )
First Regular Session )

neon, 3797

Introduced by Honorable Representative
HERMILANDO L MANDANAS
2° District, Satanges

AN AGT AMENDING PRESIDENTIAL DECREE NO. 612, AS AMENDED, OTHERWISE
RNOWN AS THE INSURANCE CODE, AS AMENDED BY PRESIDENTIAL DECREE NOS.
141, 1280, 1488, 1460, 1814 AND 1981, AND BATAS PAMBANSA BLG. 874, ‘AND FOR
OTHER PURPOSES.

Be it enacted by the Senate and House of Representatives of the Phiippines
in Congress assembled.

SECTION 1. Title. - This Act shall be known a6 *The insurance Code of 2070",

SEC. 2. Section 1 of the insurance Code, as amended, is hereby amended to read 2s
follows:
“Sechon 1. This Act shall be known a5 "The insurance Cade of 20107,

SEC. 3. Secton 2, paragraph 2(d) of The Insurance Code, as amended, is hereby amended
to read as fokows:

+(@) doing or proposing to do any business in substance equivalent wo any of the forsgcing
oo eeocr designed fa evade the provisions of this Code, including the pacts of set:
2 rnunes by any person of entity extending lile insurance of similar protection to 5
borrowers, depositors, clients or third parties *

SEC, 4. Section 3 of the Insurance Code, @s amended, is hereby amended to read 25
follows:

“Sec. 3. Any contingent or unknown event.
amnity 2 person naving an insurale snterest or creeve &
against, subject to the provisions of this chapter.

<The consent of the spouse is not necessary for the validity of an insurance policy
taken out by 2 married person on his or her ife or that of his ar her children.

“Al rights, tite and interest in the policy of insurance taken out by an anginal owns
“04 the lf or health of the person ingured shall automatically vest in the tier upon the deaths
Of the onginal owner, unless otherwise provided for in the policy.”

SEC. 5. Section 6 of The Insurance Code, as amended, is hereby amended to read as
follows:

“Sec. 6. Every corporation, partnership, or association duly authorized to transact
insurance business as elsewhere provided in this code, may be an insures.”



SEC. 6. Section 12 of The Insurance Code, as amenced, is hereby amended to read as follows:

<gec, 12. The interest of a beneficiary in @ life insurance policy shall be forteited Wher
the benefesry i the principal. accomplice, of accessary in wifuly bringing about Me geath at
the veured in such e case, the share forfeited shall pass on to the other beneficiaries, unless
ae ae aquatiied. in the absence of other beneficaries, the proceeds shal be paid in
cae tce wath the policy contract iF the pokey contract is sient, he proceeds shall De pakd to
the insured's estate.”

SEC. 7, Section 45 of The Insurance Code, as amendad, is hereby amended te read as follows

«gee. 45, fa representation is false in a malerial point, whether affirmative or promissory.
tne injured party is enttled to rescind the contract from the time when the representation
becomes false.”

SEC. 8, The tast paragraph of Section 50 of The Insurance Cade, as amended, is hereoy
deleted

GEC. 9. Section 60 of the Insurance Code, as amended. is hereby amended t0 read 2s follows.

scec. 60. An open policy is ane in which the vaive of the thing insured is not egraed
upon, and the amount of the insurance merely represents the insures maximum hobifey The
seins of such thing insured shail be ascertained at the tim of the loss.”

SEC. 10. Section 64, paragraph (1) of The Insurance Code, a5 amended, is hereby amended 0
read as follows:

{9 discovery of other insurance coverage that makes the total insurance 1 exceSe of the
value of the property insured: or a determination by tre Commissioner that the contauaben of the
falicy would violate or would place the insurer in violation of this Code.”

SEC. 14. Section 65 of The insurance Code, as amended, Is hereby amended to read as folows:

-sec. 65. AN notices of cancellation mentioned in the preceding section, shall-be,
writing, mnled or deivered ta the named insured at the address shown i the poiey of fo Ta
Fa rat hal este (a) which of the grounds set forth in section siy-fours refed upon ane
thai. upon writen tequest of the oamed insured, the insurer wil umish the facts on which the
cancellation is based.

SEC. 412. Section 77 of The Insurance Code, as amended, is hereby amended to read as follows:

-Gec, 77, An insurer is ented to payment of the premium as soon as the thing agree
exposed to the pert Insured against. Notwinstanding any agreement © te cole, policy or
oe oe Oe reuvance msved by an insurance company i valid and binding unless. and Wall the
premium thereof has been paid, except in the case af a Ie oF 3 induswial Ife policy whenever
She grace period provision applies, of whenever under the agency armaments with duly
the ora Rrmediaries, a 90-day credit extension is given. No credil extension to 2 duly licensed
seer madiary should exceed 90-days from date af issuance of the polly. Payments of premium to
brokers are not considered payment of premium to the insurers.”

v



SEC. 13. Anew Section 78 of The Insurance Code, as amended, is hereby added to read as
fotows’

“Sec. 78. An employee of the Republic of the Philippines, includirg its polinca:
subdivisions and instumentalites. ard government owned of controlled corporations, may Pay
fis insurance premium and loan obligations through salary deduction: Provided, “ne weasitet
rani paymester cr official of the ently employing the government employee (s suthorzed,
Satuthstanding the provsions of any existing law. rules and regulations to the contrary, to rake
Seductions from the salary, wage of Income of the latter pursuant fo the agreement berween the
eee cind the gavernment employee and fo remit such deductions to the Insurer concemed, and
collect such reasonable fee for is services.”

SEC, 44. The old Section 78 af The Insurance Code, as amended, is hereby renumbered as
Sesion 79 and the gactions subsequent thereta are accordingly renumbered unbl Section 80,
which shall be renumbered as Section 81

SEC. 18. Section 81 of The Insurance Code, as amended, is hereby renumbered as Sechan €2
and amended to read as foliows:

‘Sec. 82. A person insured is entited to retum of the premum when the contract is
voidable and saibsequently annued under the provisions of the Civil Code; or, on acvount of
Fou of intentional misrepresentation of the insurer, or of his agent, or on account of fects, the
Sactance of which the msured was ignorant without his faut, or when by any default of the
Iheured other than actuat fraud, the insurer never incurred any kabllity under the policy.

“A person insured is nat entitea to a return of premium ifthe policy is annuled, rescinded
or fa claim is denied by reason of his fraud or misrepresentation.”

SEC. 16. Section 82 of The insurance Code, as amended, is nefeby renumbered as Section 63
and amended to read as follows

Sec. 83. In case of an overinsurance by several insurers other than Ife, the «nsured is
entitled to a ratable return of the premium, proportioned lo the amount by which the aggregate
Sum insured in all the policies exceeds the insurable value of the thing at nsk.*

SEC. 17. A new Section 64 of The Insurance Code, as amended, is hereby added to read as
follows:

“gee. 84. An insurer may contract and accept payments, in addition ta regular pre,
for the purpose of paying future premiums on the policy orto increase the benefits thereof

SEC. 18. The old Section 83 of The Insurance Cade, as amended. is hereby renumbered 3s
‘Sector 85 and the sections subsequent thereto are accordingly renumbered until Secaon 87,
which shall be renumbered as Section 89,

SEC. 19, Section 88 of The Insurance Code, as amended, is hereby renumbered as Section 90
and amended to read 2s follows:

“See. 90. In case of loss, an msurer is exonerated, i notice thereot be not given to him by
an insured, of some person enttied fo the benefit of the insurance, without unnecessary delay
fom occurrence of the loss. In case of death, an insurer is likewise exonerated if notes thereot
he not given the insurer withaut unnecessary delay from discovery of death.”



SEC. 20, The oid Section 89 of The Insurance Code, as amended, is hereby recumiberad as
Section 91 and the sections subsequent thereto are according'y renumbered ntl Section 23,
‘which shall be renumbered 26 Secton $5.

SEC. 21, Section 94 of The Insurance Code, 2s amended, is hereby renumbered as Secton 96
‘and amended to read as follows:

“sec, 86. Where the insured, « @ policy other than life, is overinsured by double
insurance:

“{a) The insured, unless the policy otherwise provides, may claim payment {0% te
insurers Sr even order ay he may select, up t0 the amount for which the insurers are severaly
liable under thei respective contracts;

+{b) Vinere the policy under which the insured claims is a valued policy, any sur receiver!
by him under any other policy shall be deducted from the value of the policy without regard fe the
actual value of the subject matter insured:

“(c) Where the policy under which the insured clams is an unvalued policy any sum
received by hie under any policy shal be deducted against the full insurable value, for any sury
received by him under any policy:

+(d) Where the insured receives any sum in excess of the valuation in the case of valued
policies, or of the insurable valve in the case of unvaiued policies, he must hoki such sur: in rust
for the insurers, according to their right of cantibution among themselves;

{e) Each insurer is bound, as between himself and the other insurers, fo canotoute
ratably to the toss in proportion to the amount for which he is liable under hie contract *

SEC. 22, The old Section 96 of The Insurance Code, as amended, is hereby renumbered as
Secton 97 and the sections subsequent thereto are accordingly renumbered untl Section 178,
which shail be renumbered as Section 180.

SEG. 23. Section 179 of The Insurance Code, 26 amended, is hereby renumbered as Section
181 and amended to read as follows:

“Sec. 181. Life insurance is insurance on human lives and insurance appertaining thereto
or connected therewith.

“Every contract or undertaking for the payments of annuities including contracts for the
payment of lump sums under 2 retirement program where a life insurance company manages
eeenee a trustee for euch reliement program shall be considered a We insurance contract for
purposes of this Code.

<A life insurance policy may also be taken by 2n individual who intends to travel By ship
or apiane. ‘Such policy shell be effective onty during the coume of the tava”

SEC. 24. Sechon 180 of The Insurance Code, as amended, is hereby renumbered as Section
4182 and amended te read 2s follows:

“Sec, 182. An insurance upon le may be made payable on tre death of the person. of
on his survwing a specified period, or otherwse contingently on the continuance cr cessation of
We



“Every contract of pledge for the payment of endowments or annuites shall be
considered a life insurance contract for purpose of this Code.

sin the absence of a judicial guardian, the father, or in the latter’s absence or incapacity,
the mother, of any minor, who is an maured or a beneficiary under 2 contract of ife, health oF
ee float insurance, may exercise, in behalf of said minor, any right under the policy, without
secessty of court authority or the giving of a bond, where the interest of the minor in he
ferbeulat act involved does not exceed two hundred Fify thousand pesos or ia such amount as
Tray be determined by the Commissioner. Such right may include, but shall mt be imited fo
Staining a poley loan, surrendering the policy. receiving the proceeds ofthe policy, ane gwving
the minor's consent to any tansaction on the pokcy.

“in the absence or in case of the incapacity of the father or mother, the grandparent, the
‘eidest brother of siste’ at least eighteen years of age, or any relative who has actval custody of
the minor insured or oeneficiary, shall act as a guardian without need of a court order or judicial
Sepointment ae such guardian, as fong as such person is not otherwise disqualified. oF
incapacitated Payment made by the insurer pursuant to this section shall relieve & ‘of any Kability
under the contract.”

SEC. 25, The old Section 180-A of The Insurance Code, as amended, is hereby renumbered as
Section 183 and the sections subsequent thereto are accordingly renumbered until Sechan 183,
‘which shall be renumbered as Section 186.

SEC. 26. A new Tite on Microinsurance and a new Section 187 of The insurance Code, as
amended, are heraby added to read as follows. .
“Tide 6
“MICROINSURANCE

“Sec. 187. The term “microinsurance” shall mean an activity providing specific insurance,
nsurance-tke and other similar products and services that mest the needs of the fow income
‘Sector for Aisk protection and relief against distress, misfortune and other contingent events. Tris
Shall include al forms of insurance, insurance-tike and other similar activities with the following
feanures:

a. Premiums, conbibutions, fees or charges are collected/deducted prior :o the occurence
of the a contingent event; end

b, Guaranteed benefits ere provided upon occurrence of 2 contingent event.

-No insurance company shall engage In the business of mitroinsurance unless ft
possesses all fe requirements as may be prescribed by the Commissioner, The Camwmissioner
Shal issue Such rules and regulations governing mcroinsurance.”

SEC. 27. Section 164 of The Insurance Code, as amended, is hereby renumbered as Section
788 and amended te read as follows:

“Sec. 188. For purposes of this Code, the lerm “insurer or ‘surance compeny* shal
include all partnerships, associations, oF Corporations, including government-owned of controlled
comporstions or entites, engaged as principals in the insurance business Uniess the context
Ginerwise requires, the terms shall also indude professional reinsurers defined in section {two
hundred eighty. ‘Domestic company” shall include companies formed, organized ox existing
Under the lows of the Philippines. “Foreign company when used without lurstation shail include
Companies formed, organized of existing under any laws other than those af the Philippines.”



SEC, 28, Section 185 of The Insurance Gode, as amended, is Rereby renumbered a8 Section
189 and amended to read as follows:

“Sec. 189. The provisions of the Corporation Code, as amended, shall apoly to all
insurance evrporations new or hereafter engaged in business in the Philippines insofar as they ce
pot conflict with the provisions of this chapter *

SEC. 29, Section 186 of The Insurance Code, a8 amended, is hereby renumbered as Section
490 and amandes to read as follows:

“See. 190. No corporation. partnership. or association of persons shall transact On)
ineurance business fa the Philippines except as agent of 2 corporation, partnershep OF association
atid to do the business of ingurance in the Paiippines, unless possessed! of He capital and
ates required of an insurance corporation doing the same Kind of business 9 the Philippines.
eet invested in the same manner, nor uniess the Commissioner shall have granted to it 3
act feats to the effect that t has compled with all ihe provisions ofthis Code.

«Every corporation, partnership, or association ceceivng any such certicate of authorty
shall be subject 10 the insurance and other applicable laws of the Phiinpines and to the
Jurisdiction and supervision of the Commissioner and other appropiate goverment agencies.”

SEC. 30. Section 187 of The insurance Code, as amended, is hereby renumbered as Section
191 and amended to read 28 follows:

gee, 191. No insurance company shall vansaci any insurance business 9 Oe
Phiippines untl after it shall have obtained a certificate of autharty for that BARS from the
Rhiuppines untljpon apptcation therefor and payment by the company concemed of the fees
hereinafter prescribed.

<The Commissioner may refuse to (Sse a certificate of authonty to any ‘nswance
company iin nis judgment, such refusal will best promote the interest Of the peonle of this
Seuntry No such certificate of authority shail be granted lo any such, compally until the
Comreesioner shall have satisfied hienself by such examination 3s he ey snake and such
eGonce 28 he may require thal such company is qualified by the laws of fe Philippines to
aeaeect business inerein, that the grant of such authority appears fo be justified 10 the fight of
aaaaevie requirements, and that the direction and administration, as well as he integrity and
esponsibility of the organizers and administrators, the fhanciol organization and the amount of
capil, reasonably assure the safety of the mterests of the policyholders and the pubic.

sin order to maintain the quality of the management of the insurance compares and
afford better protection to policyholders and the public in general, ary pete ‘of good mora!
seo unquestioned integrity and recognized competence may De elected oe appointed
Chemorer offiger of insurance companies, in accordance with the pertinent proveoes contained
Cit oii et Govemance crculars prescnbed by the Commissioner. In adction nereio, the
Tae ee rcar anal! prescribe the qualifications of directors, executive officers and over key
‘Gfficials of Insurance Companies for purposes of this section,

nie person shail concurenty be a director andi ofier of an insurance company SOS
an adjustment company. Before issuing such certificate of authorty, the Commasione must be
ae drat tne name of the company i not that of any ott Known company PoAsaelhs
SaaS at te in te hlippanes, ora name so sila a6 to pe calculated co misiend he PUP.
site bane with the provisions of the Corporation Code on the use of corporate nantes



“Every company receiving any such certificates of authority shell be subject to. he
provisions of this Code and other related laws and to the jurisdiction and supervision of the
Commissioner and other appropriate government agencies,

“No insurance company may be authorized to transact in the Philippines the business of
ie and noncle ingurance concurrently uniess specifically authorized to do so by the
Sorenesioner Provided, That the terms fe" and “aon-ife" insurance shall be deemed to wnciude
neaith, accident and disability insurance.

*No insurance company shall have equity in an adjustment company and nettner shal an .
adjust ment company have equity in an msurance company”

SEG. 31. Section 168 of The Insurance Code, as amended, is hereby renumbered as Section
192 and amended to read as follows.

sec, 192. No domestic stock insurance company shall engage in insurance or
reinsurance business in the Phitippines uniess possessed of the required ‘capitalization which
includes minimum net worth and paid-up capita! 3s defined and provided under applicable orders
and/or circulars issued by the Secretary of Finance, upan recommendation of the Insurance
omeniseoner ‘The Secretary of Finance may change such minimum net worth and paid-up
capital stock requirement, under such terms and conditions as he may Impose, to an amount
which, in his opinian, would reasonably assure the safety of the interests of the policyholders and
the public.

“The Commissioner may, as @ pre-scensing requirement of 2.new insurance company, in
addition ta the paid-up captal stock, require the stockholders to pay in cash to the company it

. Proportion to their subscription interests a contributed surplus fund ir. an amount as may be xed
Prapplcable orders and croulars duly issued ty the Commissioner. He may also reaire such
a eeany of already existing companies, 1D submit to him a capital bulttup program of 2
business plan showing the company's estimated receipts and disbursements, a5 well as the basis
therefor, for the next succeeding three years.

sit organized 2s 8 mutual company. in leu of such capital stock, t must have avaiable
cash assets in an amount not less than that required under present or future applicable orders O°
Cash ore sssued by the Secretary of Finance, upon recommendation of the Commissioner These
fFagured cash assets must be net of all iabilies for losses reported. emenses, taxes. legs)
recewe. and reinsurance of alt outstanding risks, and the contributed surplus func must be eoval
fe ine amounts required of stock corporations. A stock insurance company doing busmess m the
Bhiippines may, subject to the peninent laws and reguieions which naw are of hereafter may be
in fore, alter i organization and transform itself into a mutual insurance company.”

SEC. 32. The old Section 189 of The insurance Gade, as amended, is hereby renumbered 25
Section 193 and the sections subsequent thereto are accordingly renumbered unt Sectran 190,
which shall be renumbered a8 Section 194.

SEG. 33. Section 191 of The insurance Code, as amended, is hereby renumbered 2s Secton
195 and amended to read as follaws:

“gee, 195, No insurance company organized of existing under the government OF faws
other than tose of the Philippines shak engage in business in the Philippines unless possessed
Of poki-up unimpaired capilal or assets und reserve not leas than Wat reauren) of aomense
Sa companies under applicable or order or citculars of the Commissioner. nor unt i shat
Hea geposites with the Commissioner for the benefit and secuty of the pokcyhoisers and
Troditors of such company ia the Philippines, secuntias satisfactory to the Commissioner



consisting of good securities of the Philippines, including new Issues of stock of ‘registered
Gnterprises”, as this term is defined in Omwibus: investments Code, a3 amended, tm the actual
Market valve of not less than the minimum pak+up captal required of domessc insurance
‘companies: Provided, That at least fity per centum of such secusties shall consist of bond's o
Gther evidences of debt of the Government af the Philippines, its palitical subdivisions ard
instrumentalites, or of govemmentowned or controlled corporations and entities, including the
Bangko Sena! ng Pilipinas. Provided further, that the folal investment of 2 forsign insurance
company in any registered enterpnse shail not exceed twenty per centum of the net worth of said
foreign insurance company aor twenty per centum of the capital of the registered enterpnse,
unless previously authorized in writing by the Commissioner.

“For aurposes af this Code, the net warth of a foreiga insurance company shall refer only
to its net worth in the Philippines.

SEG. 44, Sestion 182 of The Insurance Code, as amended, is hereby renumbered 2s Section
196 and amended to read 2s follows:

*Sec. 196, The Commissioner shail hold the securities, deposited as required in the
immediately preceding section, for the benefit and secunty of ail the potcyhaders and creditors of
the company depositing the same. Provided, That the Commissioner may, as long as the
company is solvent, permit it to collect the interest or dividends on the securities so deposited,
‘and, from time to time, with his assent, to withdraw any of such secuniies, upon depositing with
‘Said Commissioner othar like seourites, the market vaiue of which shall be equal to the market
Value of such as may be withdrawn, in the event of any company ceasing ta do business in the
Pniippines, the securities deposited as aforesaid shall be returned upon tie company, upon the
Commissioners widen approval and only after the company has duly proven in #s applicabon
therefore that it has Ao further ‘ability whatsoever under any of ifs policies nor to any of its
creditors in the Philippines.”

SEC. 35, The old Seckon 193 of The Insurance Cade, 3s amended, is hereby renumbered as
‘Section 197

SEC. 36. Section 194 of The Insurance Code, as amended, is hereby renumbered as Section
188 and amended to read as follows: :

“Sec 198. An insurance company dcing business in the Philippines shall at ail tmes
maintain the minimum paid-up capital and networh requirements as prescribed by the
Commissioner. Such requirements shall be based on intemationally accepted solvency
frameworks and adopted only after due consultation with and consideration of tne
recommendations of the insurance industry associations.

Such assets, liabiiues and reserves shall exciude asséts, liabilities and reserves included in
Separate accounts established in accordance with section [two hundred thirty-seven], Whenever
the aforementioned margin be found to be less than mat herein required to be maintained, the
Commissioner shalt forthwith direct the company to make good any such deficiency by cash. to
be contbuted by all stockholders of record in proportion to their respective interest, and oaid to
the heasurer of he company, within fifteen days from receipt of the order: Provided, Thatt the
company in the interim shall not be permitted ta take any new risk of any kind or character uniess
and until make good any such decency: Provided, further, that a stocknokler who aside from
paying the contribution due lrom hin, pays the contnbution due from the another stockholder by
Fedcon of the failure of refusal of the Iati 1D do so, shall have a lien an the certificates of stock of
the insurance company concened appearing in its books in the name of the defauiting
Stockholder on the date of dafauit, as well as on any interests or dividends that have accrues or
wil accrue te the sald certificates of stock, until the corresponding payment or reimbursement 5
made by the defaulting stockholder.”



SEC. 37. Section 196 of The Insurance Cade, as amendec, is hereby renumbered as Section
199 and amended to read as follows

“Sec. 199. No domestic insurance corporation shall declare or distribute aay dividend on
its outstanding stocks unless it has met the minimum paid-up capital anc net worth requirements
dager Section One Hundred Ninety Eight and except from profits attested in a swom statement to
the Commissioner by the president or teasurer of the corporation to be remaining on hand after
retaining unimpaired:

(a) The entire paid-up capital stock,

*(b) In the case of life insurance corporation, the legal reserve fund required by section [two
hundred eleven];

*(¢) In the case of corporations other than fife, the legal reserve fund required by section [two
hundred thirteen]:

“{d) A sum sufficient to pay all net losses reported, or in the course of settlement, and at Habibes
for expenses and taxes.

“any dividend declared or distributed under the preceding paragraph shall be reported to
the Commissioner within thiey days after such declaration or distbuticn

-if the Commissioner finds that any such corporation has declared or distibuted any such
dividend in violation of this section, he may order such corporation to cease and desist fram doing
business until the amount of such dividend or the portion thereof in excess of the amount allowed
under this section has been restored to said corporation”

SEC. 38. Section 196 of The insurance Code, as amended, is hereby renumbered as Section
200 and amended to read as follows:

“Sec. 200. in any determination of the financial condition of any insurance company doing
business in the Philippines, there shall be alowed and admitted as assets only such assets
fegally or beneficially owned by the insurance cornpany concemed as determined by exter!
silts accredited by the Commissioner who examined the financial statements of the insurance
‘company concemed and which consist of

+1. Cash in the possession of the insurance company or in transit uncier fis control and
the sue ‘and duly varited balance of any deposit of such company in @ financially sound
‘commertial bank or trust company.

“2. investments in securites, including money market instruments, and in real property
ecquired or held in accardance with and subject to the applicable provisions of this Coce-and the
income realized therefrom or accrued thereon,

+3. Loans granted by the insurance company concemed to the extent of tha partion
tnereof adequately secured by non-speculative assets wih readily reatzable vakes in
Gocordance with and subject to the limitations imposed by applicable provisions of this Cade.

4, Policy loans and other policy assets and liens an policies, contracts or cenificates of 2
fe insurance company, in an amourtt not exceeding fegal reserves and ather poly habities
ried on each individual life insurance policy, contract or certificate.



*

+S, The net amount of uncollected an¢ deferred premiums and annuity considerations in
the case of alife insurance company which cares the full mean tabular reserve Gability.

“6, Reinsurance recoverable uy *he ceding insurer: {a) from an insurer authorized to
trensact business in this country, the full amount thereof, or (b) from an insurer ot authorized in
the country, in an amount not exceeding the Fabiities carsied by the ceding insurer for amounts
Qutnneid under a reinsurance treaty with such urauthorized insurer as security for the payment of
‘Obligations thereunder if such funds are held subject to withdrawal by, and under ine control of
the ceding insurer, The Commissioner may prescribe the conditions under which a ceding insurer
may be allowed credit, a5 2n asset of 25 a deduction fram loss and uneafned premium reserves,
for reinsurance recoverable fram an insurer not authorized in this country but which presents
satisfactory evidence that it mests the applicable standards of solvency required in this county.

“7. Funds withheld by 8 ceding insurer under a reinsurance treaty, provided reserves for
unpaid losses and unearned premiums are adequately provided.

*8, Deposits of amounts recoverable from underwriting associations, syndicates and
reinsurance funds, or from any suspended banking institution, to the extent deemed by the
‘Commissioner to be available for the payment of losses and claims and values to be delermined
by him.

*9, Electronic data processing machines, as may be authorized by the Commissioner to
be acquired by the insurance company concemed, the acquisition cost of which to be amortized
in equal annual amounts within a period of five years from the date of acquisition thereof,

“10, Mutual funds, real estale investment trusts, unit invesiment trust funds and spaciat
‘deposit accounts.

“11. Other assets, not inconsistent with the provisions of paragraphs 1 to 10 hereof.
which are deemed by the Commissioner tn be readily realizable and available for the payment of
losses and claims at valves to be determined by him in a circular, rule or reguiation.

+42, Other investments not otherwise covered by the above, provided that such may be
reclassified as non-admitted assets after a subsequent audit conducted by the Corwmissioner.”

SEC. 39. The old Section 197 of The Insurance Code, as amended, ts hereby renumbered as
Section 201

SEC, 40. Section 198 of The Insurance Code, as amended, is hereby renumbered as Section
202 and amended to reac as follows: .

"Sec. 202. A life insurance company may lend to any of its policyholders upcn the
secutity of the value of its policy such sum as may be determined pursuant to the provisions of
the policy

“No insurance company shai oan any of its money or deposits | any person,
corporation or association, except upon the security of any of the following:

a) first mortgage or deeds of trust of registered, unencumbered, improved oF unimproved
real estate, including condomimums, in cities and centers of population of municipaiites In the
Philippines, or

10



<p) frst mortgages or deeds of trust of actualy eutvated, improved and unencumbered
agriculturat lands in the Philipines” or

‘c) purchase money mortgages. lease purchase agreements or simiar securtios
‘executed or received by it an account of the sale or exchange of real property acquired pursuant
to sections [two hundred and two hundred wa}: or

“a) bonds oF other evidences of indebtedness Issued of guaranteed by the of the
Goverment of the Philppines or its poliical subdivisions authorized by lew to incur such
Shigations of issue such guarantees or of government-owned or controled corparations and
instrumentalities including the BangXo Sentral ng Pilipinas: or

“e) obligations issued or guaranteed by universal banks, commercial banks, affsnare
banking units, Investment houses oF other financial intermediaries duly registered with the
Bangko Sentral ng Plipinas; oF

1 obligations issued ar guaranteed by foreign banks or corporations, each of which shal
have total assels of one billion US dollars, as shown in their financial statements as of the
ammedistely preceding fiscal year; or

“g) assignments of monetary instruments such as cash deposits, promissory notes,
deposit certificates or other similar instuments of universal banks. commermal berks,
investments houses or other financial intermediaries duly registered with the Bangko Senta! ng
Pilipinas;

. “h) pledges of shares of stock, bonds or other evidences of indebtedness specified 1
section [two hundred thirty-four);

i) chattel mortgages ever equipment not more than three years old; and
+) such other security as may be approved by the Commissioner.

“The loans provided in the preceding subsection shall be subject to the following
conditions:

*a} The amount of loan secured by real estate mortgage over a non-agncutural ‘and
shall not exceed eighty per centum of is appraised value, and in the case of a joan secured By 2
teal estate morgage over an agricultural land, the amouat af loan shall not exceed forty per
Centum of its market value. Provided ‘hat, in no case shall such loan have @ maturity period
excess of twenty-five years:

-b) Unless appraved by the Commission, no Joan may be granted upon the security
of a morgage on improved real estate i the Improvements therean do nt belong the owner of
the lend and the owner of the improvements does not signed the deed of mortgage. However. i

«the owner of the land ts the Goverment of the Philippines of any or its political subdivistonss and
3 tong term lease has been executed in favor of the owner of the improvements, the owner of the
land nead net be 2 party to the deed of mortgage. The expiration dale of the tease shall not,
fawever, precede the maturty of the Joan. The phrase “improved real estate” as used herein
shall mean fand with permanent building of buildings erected thereon,

“c} Purchase maney morigace, lease-agreements or sintlar securities received on
the sale of real estare property shall not exceed one hundred per centurn af the selling price of
1 sold property, or one hundred per centum of its market value at the time of ts disposition,

Ml



whichever amount is lower However, in no case shall such mortgage or agreement have @
‘maturity period of twenty-five years;

“d) Loans secured by pledges of shares of stock of solvent corporations
institutions shall not exceed fity par centum of

1) The latest seling price of such stocks listed in the stock exchange or unlisted stock
traded alsewnere;

2) The book value of said stock, in case of slacks which are neither Isted in any stock
exchange nor transacted elsewhere, but the stock certficates for the shares pledge
Sal’ be endorsed oF assigned to the lending insurance company. | The phrase
Solvent corporation’ as used herein shall mean a corporation or entity which has
recorded profits for a penod of at least three years immediately preceding the date of
the loan:

“e) Loans secured by the chattel mongages over equipment shall not exceed
seventy-five per oertum of the market value of said equipment, and

. Venture capital investments, equity on Joans, shalf not exceed, per investment
forty per centum of the insurance company's net worth as shown jn its latest financial statement
approved by the Cammission.”

SEC. 41. Section 199 of The Insurance Code, as amended, is hereby renumbered as Section
203 and amended to read 2s follows:

“Sec. 203. No loan by any insurance company on the security of real estate shall be
made unless the title to such real estate shall have first been regislered in accordance with the
existing Land Registration Act, or shall have been previously registered under the provisions of
the existing Mortgage Law and the Hen or interest of the insurance company as mortgagee has
been registered”

SEC. 42. Section 200 of The Insurance Code, as amended, is hereby renumbered as Section
204 and amended to read as follows:

“Sec, 204. (1) An wnsurance company may purchase, hold. own and convey such
property, real and personal, as may have been mortgaged, pledged. or conveyed to it in good
Dit in rust for ts benefit by reason of money loaned by it in pursuance of the regutar business of
the company, and such real or personal property a& may nave been purchased by it at sales
under pledges, mortgages or deeds of tst fOr its benefit on account of money Yoaned by it and
such real and personal property as may have been conveyed to it by Dorrowers in satisfaction
and discharge of laans made by the company in payment o by reason of any joan made by
shal be sold by the company within twenty years after the tite thereto has been vested init.

+(2) An insurance company may purchase. hold, own and convey real and personal property as
follows:

*{a) The real property in which the company conducts and caries on its business
Provided. That no domestic non-ife insurance company shall invest in the kinds permitted under
this secdon an amount in excess of twenty per centum of the net worth of such insurer as shewn
thy its latest financial statement approved by the Board.

2



“{e) Blonds or other evidence of indebtedness of the Government of the Philippines or its
political subdivisions ‘authorized by taw to issue bonds at the reasonable market value thereof.

*{c) Bonds or other evidences of debt of the government-ewned or contoted
corporations and entities, including the Bangko Sentral ng Pilipinas

+d) Bonds, debentures oF other evidences of indebtedness of any solvent corporavons oF
institution created or exisling under the faws of the Philippines: Provided, however, That he
‘Beuing, assuming oF guaranteeing entily or its predecessors shall not have delaulted in the
payrnent of interest on any of its Securites and that during each of any three inctuding the fas: two
of ihe five Fiscal years next preceding the date of acquisition by such insurance company of such
bonds. debentures, or other evidences of indebtedness, the net earnings of the issuirg, assucning
or guaranteeing institution available for its fixed charges. as hereinafter defined. shall have bees
fotiess than one ané one-quarter times the total ofits fixed charges for such year, and Provided,
further that no life insurance company shall invest ia or loan upon the obligations of any one
inatiution in the kinds permitted under this sub-sectian an amount in excess of twenty-five per
Centum of the total admited assets of such insurer as af December thirty-first next preceding the
date of such investment

‘as used in this sub-section the term “net eamings available for fixed charges” shail
mean net income after deducting operating and maintenance expenses, taxes other than income
taxes, depreciation and depletion; but excluding extraordinary non-recurring items of income. or
expense appearing in the regular financial statement of the issuing, assuming or guaranteeing
instiufion The term “fixed charges” shall inciude interest on funded and unfunded debt
amortization of debt discount, and rentals for leased properties.

“{e) Preferred or guaranteed stocks of any solvent comoration or institution created or
existing under the laws of the Philippines, Provided, That if the stocks ere guarntesc. tne
Gmount of stocks 30 guaranteed is not excess of ity per centum of the amount of the preferred or
Somnmon stocks, 26 the case may be, of the guatanteeing corporation, and Prowxded, finaly, Thar
Po life insurance company shall invest 1n of loan upon obligations of any ane institsbon in the
kinds permitied under this sut-sacton an amount in excess of ten per centurn of the tov)
omitted assets of such insurer as of December thirty-first next preceding the date of such
investment

=( Common stocks of any solvent corporation or insitution created or existing under the
laws of the Philippines: Provided, however, That no life insurance company shaft vest in or toon
tupon the obligetions cf any ane corporation of institution in the kinds permitted uncer this Sub
Section an amount in excess of ten pef centum of the total admitted assets of such insurer 3s of
December thirty-first next preceding the date of such investment,

~(g) Secunties issued by an “registered enterprise”, as this term is defined in Republic Act
No. 6186, otherwise knewn as the Investment incentives Act. as amended. provided that the total
investment of a domestic non life insurance company ip any registered enterpnse shail nol
exceed fity per centum of the net worth of sad insurance company as shown by tts aforesaid
financial statement unless previously authorized by the Commissioner.

th} Certificates, notes and other obligations issued by the trustees or receivers of any
Institution created ar exieting under the Iswe of the Philippines which, oF tre assets of which, ae
being administered under the direcbon af any court having jurisdiction, Provided, however ‘trac
cearvcertiicates, notes or other obligations are adequately secured as to principal and interests.



*() Equipment trust obligations or certificates which are adequately secured or other
adequately secured instruments evidencing ar interest in equipment wholly or ie part within the
Phiippines: Provided, however, That there is a right to cecelve determined portions of rental,
purchase or other fixed obligatory payments fo: the use of purchase of such equipment

*@) Any obligation of any corporation or institution created oF existing under tre laws of
the Philippines which is, on the date of acquisition by the insurer, adequately seoured and nas
duafiles and characteristics wherein the speculative elements are not predominant

“(4 Such other securities as may be approved by the Commissioner.

+(3) Any domestic insurer which has outstanding insurance, annuity o° reinsurance contracts m
curences other than the national currency of the Philippines may invest in, or otherwisé acquire
fr loan upon secunties and investments in such currency which are substantially of the same
kinds, classes and investment grades as those etigibie for investment under the foregoing
subdivisions of this section; but the aggregate amaunt of such investment and of such cash in
such currency which is at anytime held by such insurer shall not exceed one and one-half times
tho amount of #s reserves and other obiigaions under such contracts or the amount of its
feserves and other obligatons under such contracts or the amount which such insurer is required
by the law of any country outside the Republic of the Philippines to be invest in such country.
whichever shall be greater.”

SEC. 43. Section 201 of The Insurance Code, as amended, is hereby renumbered as Section
205 and amended to read as follows:

“Sec. 208, An insurance company may (1) invest in equities of other financia\ institutions.
and (2) engage in the buying and selling of short-term debt instruments: Proviced, That any or all
of such investments shall be with the por aporaval of the Commissioner, except listed equities of
cotner financial institutions.”

SEC. 44, Section 202 of The Insurance Cade, as amended, is hereby renumbered 2s Section
206 and its paragraph (a) is hereby amended fo read as follows:

*{@) Acquire of construct housing projects and, in connection with any such praject, may
‘acquire land oF any interest therein by purchase, lease or otherwise, of use land acquired
pursuant to any other provision of this Cade. Such company may thereafter own, maintain.
Manage, collect or receive income from, or sail and convey, any land oF interest thersin so
‘Soquired and any improvements thereon. The aggregate book valve of the investments of any
Such company in all Such projects shall not exceed at the time of such investments twenty five
pet centum of the lotal admitted assets af such company on the thirty-frst day of December next
preceding, Provided, That the funds of the company for the payment of pending claims and
‘obligabors shell not be used for such investments”

SEC. 45. The old Section 203 of The Insurance Gode, as amended, is hereby renumbered 3s
Section 207 and the sections subsequent thereto are accordingly renumbered unti Section 207,
which shall be renumbered as Section 211

SEC. 46. Section 208 of The Insurance Code, as amended, Is hereby renumbered as Section
242 and amended to read as follows: .

“See. 212. (1) All bonds oF other evidences of indebtedness having a fixed term and rate
of interest and held by any Ife insurance company authorized to do business ia this county, if
Gmply secured and if not in defauk as to principal or interest, shall be valued based on ther
Bmorized cost using effective interest method less impaicment and unrecoverable amount based

4



“(6) Purchase money mortgages receives on dispositions of real propery held pursuant
to section fone hundred ninety-eight) shall be valved in an amount equivalent to ninety pe
centum of the value of such real property. Purchase money mortgages received on disposition of
teal property otherwise held shail be valued in an amount not exceeding ninety per centum of the
Value of such seal property as determined by an appraisal made by an appraiser at or apout the
‘ime of disposition of such real propery

(1) The stock of @ subsidiary of an insurer shall be valued on the basis of the greater of
) the value of enly such subsidiary of the assets af such subsidiary as would constitute lawful
investments for the insurer if acquired or held directly by the insurer or (i) such other value
‘determined pursuant to standards and cumulatve Kmitations. contained in a regulation to be
promuigated by the Commissioner.

*{8) Notwithstanding any provision contained in this section or elsewhere in this chapter,
if the Commissioner find that the interests of policyholders so permit or require, he may permit or
require any class or classes of insurers authorized to do business in this country to value their
investments or any class of classes thereof as of any date heretofore or hereafter in accordance
with any appticable valuation or method.”

SEC. 47, The old Section 209 of The Insurance Code, 2s amended, is hereby renumbered as
Section 213.

SEC. 48. Section 210 of The Insurance Code, as amended. is hereby renumbered as Section
214 and amended to read as follows:

“Sec, 214. Every fe insurance company, doing business in the Philippines, shall annually
make @ valuation of all pofies, additons thereto. unpaid dividends, and all other obligations
outstanding on the thirty-first day of December of the preceding year. Al! such valuations shall be
made according to the standard adopted by the company, as prescribed by the Commissioner
accordance with internationally accepted actuarial standards. which standard shall be stated in its
annual report.

*Such standard of valuation shall be according to a standart table of mortality with
interest at not more than six per centum compound interest. When the preliminary term’basis
Used, the term insurance shall be limited to the frst policy year

“The results of such valuations shall be reported to the Commissioner on or before the
thirtieth day of April of each year accompanied by @ swam stalement of the company's actuary
certifying 19 the figures and stating upon what mortality table it iS based, upon what rate of
interest the valuation is made. and the methods used in arriving at the result obtained.”

SEC. 49. The old Section 211 of The Insurance Code, as amended, is hereby renumbered as
Section 212 and the sectons sussequenl thereto are accordingly renumbered unt Gecton 218,
which shall be renumbered as Section 222.

SEC. 50. Section 219 of The Insurance Code, as amended, is hereby renumbered as Section
223 and amended to read as follows:

"Sec. 223. Any insurance company doing business in the Philippines desiring to cede
ther excess risks to foreign insurance of reinsurance companies not authorized te transact
business in the Philippines may da so under such terms and conditions which the Commissioner
may prescribe.

16



on appropriate measurement methods which: are generally accepted inthe industry ard accented
by tne Commission. The Commissioner shall have the power to determine the sigibilty Of any
cdc investments for valuation on the basis of amortization, and may by reguiaiion prescfibe of
Tent the classes of securities so eligiole for amortization. All bonds or other evidences of
ingebladness which in the judgment of the Cornmissioner are nat amply secured shall not be
cigibie for amarizaton and shall be vakied in accordance with paragraph twa. The
Caunmissioner may, ¥f he finds that the interest of policy holders sa permit or tequire, by offical
regulation permit or require any class or classes of insurers, other than life insurance companies
Suthorized to do business in this country, to value their bonds or other evidences of indebtedness
in accordance with the foregoing rule,

~(2) The investments of al insurers authorized to da business in ts country, except
securities subject ta amortization and except as otherwise provided in this chapter, shall De
Natuad, in the discretion of the Commissioner, at their market value at their amorized cost using
Sifective interest method less impaiment and unrecoverable amount or at valuation representing
THe for market value. Ifthe Commissioner finds that in view of the character of investments of
any insurer authorized ta do Business in this country it woukd be prudent for such insurer {9
aetanten a special reserve for passible lasses oF flictuations in the values of its investments, he
may require such insurer to estabish such reserve, reasonable in amount, and Include @ report
fheveon in any statement oF report of the financial candition of such insurer. The Commissioner
may, in connection with eny examination or required financial statement of an authorized instuts.
Teavire such insurer to fumish him complete financial statements and audited report of the
finsnciat condition of any corporation of which the securibes are owned wholly or partly by such
insurer and may cause an examinalion to be made of any subsidiary or affiiale of such insurer as
appropiate to specie Investments as provided in appropriate circulars issued by the
Commissioner,

*(3) The stock of an insurance company shall be valued as follows: 3) fisted stocks shal
be valued at market value and periodically adjustea to reflect market changes through @ special
Nelustion account to reflec: their realizable value when sold; b) unlisted siocks shall be valued 3t
book value based on the latest unqualified audited financial statements of the company which
igsued such stocks; and c} stocks af 3 corporation under the control of the insurer shall be valued
(sing the equity method which is the cost plus or minus the share of the controling company ia
the eamings or losses of the controlled company after acquisition of such stocks

*(4) The stock of an insurance company shail be valued at the lesser of its market value
of its book value as shown by its last approved ‘audited financial statements or the last report on:
camination, whichever ts More recent. The bock value of 2 share of common stock of an
insurance company shai! be ascertained by dividing (a) the amount of its capita! and surplus Yess
the value of al of its preferred stock, if any, outstanding, by (b) the number of shares of its
common stock issued and outstanding. Notwithstanding the foregoing provisions, an insurer
Tray. at ts oplion, value tts boldings of stock in a subsidiary insurance company in an amount not
less than acquisition cost if such acquisition cost is less than the value determined as
hereinbefore provided.

“{6) Real estate required by foreclosure or by dead in leu thereof, in the absence of @
recent appraisal deemed by the Commissioner to be reliable, shal nat be valued at an amount
Greater then the unpaid principal of the defaulted loan at the date of such forecosure oF deed,
tigether with any taxes and expenses pad of incurred by such insurer at such bmne in connection
wah such acquisition, and the cost of additions ar improvements thereafter paid by Such insure
Shd any amount or amounts thereaflet paid by such insurer on any assessments levied for
improvements in connection with the property

15



#

“Should any reinsurance agreement be for any reason cancelled or terminated, the
ceding company concemed shat inform the Commissioner in writing of such cancellation or
termination within thirty days from the date of such cancellation of termination or from the date
fobie or information of such cancellation or termination is received by Such company as the case
may be”

SEC. 51. Section 220 of The Insurange Code, as ariended, is hereby renumbered as Section
224 and amended to read as falows:;

“sec. 224. Every insurance company authorized to do business in the Phibppines shall
repott to the Commissjoner on forms prescribed by him the particulars of reinsurance treaties or
any new treaties or changes in existing treaties within six months from their effectivity.”

SEC. 52. The old Sector 221 of The Insurance Code, as amended, is heseby renumbered as
‘Section 225 and the sections subsequent thereta are accordingly renumbered untii Section 224,
which shall be renumbered as Section 228

SEC. 53. Section 225 of The ingurance Code, 3s amended, is hereby renumbered as Section
229 and amended to rend #8 follows:

“Gec. 229. Within thirty days after the approval of the Board of Directors, every insurance
company doing business in the Philippines shall publish in a newspaner of general circulation a
Sypnosis of its audited annual financial statemnerts showing fully the conditions of its business
and setting forth ts resources and iabiifies, im aqgcordance with, such ferm prescribed by the
Commissioner” '

SEC. 54. Anew Section 220 of The insurance Code, as amended, is hereby added to reac as
follows:

“Sec, 230. “The Commissioner snail have the authority Jo make, amend, and rescind
‘such accounting rules and regulations @s may be necessary tO carry out the provisions of this
Code. and define accounting, technica! and trade terms used in this Coda, provided that such
‘Shall be in accordance with internationally accepted accounting standards. Among other things.
the Commissioner may prescribe the form or farms in which raquired information shall be Set
forth, the tems or details 1 be shown in the balance sheet and income stawement and the
Tathods to be followed in the preparabon of accounts, appraisal or valuation of assets and
Tabiities, determination of recuring and nonrecurring income, differentiation of investment and
operating incorne, and in the preparation, where the Commissioner deems necessary oF
eet anid, of consolidated balance sheets of income accounts of any person directly or indwectly
‘controlling or controlled by the insurance company

SEC. $5. The old Section 226 of The Insurance Code, as amended, is hereby rejimbered 23
Section 231 and the sections subsequent thereto are accordingly renumbered uns Section 227,
which shall be renumbered 2s Section 231.

SEC. 86. Section 228 of The Insurance Code, a8 amended, is hereby renumbered as Section
232 and its paragraphs (g) and (3 are hereby amended to ead as follows

“(g) A provision tht the insurer wil issue to the poficynoider for delivery to each person
insured 9 statement as to the insurance protection to which he 1s ented, to wnom the insursnce
tonofis are payeble, and the rights set forth in paragraphs (h), () and () fosowing.” and

“9 A provision that if the group policy terminates or is amended so as to terminal Me

insurance of any class of insured persons, every person insured thereunder at the dave of Such
ae eco insutance terminates and who hes been £0 insured for fve years prior to such

7



termination date shall be entitled to nave issued te him by the insurer an individual policy of Ie
insurance subject {o the same lritations as set fonh mn paragraph (h), except that te group
policy may provide that the amount of such individual policy shalt not exceed the amourt of the
person's fife insurance protecton ceasing.”

SEC. 57. The old Section 229 of The Insurance Cade, as amended, is hereby renumbered as
Section 233 and the sections subsequent thereto are accordingly renumbered until Section 2¢4,
which shall be renumbered as Section 248.

SEC. 58. A new Section 249 of The Insurance Cade, as amended, is hereby added to read as
follows:

“Sec, 249. ft is unlowful to: a) present or cause to be presented any false or frauauient
claim fot the payment of a foss under a contract of insurance; and b) prepare, make or subscribe
any writing with intent to present or use ‘the same, or to allow @t to be presented or used in support
of any such claim. Ally perscn who violates this section shall be punished by @ fine not
cxceetiing twice the amount claimed oF imorisonrnent of ve years or both at the discretion of the
Court*

SEC. 59. The old Section 245 of The Insurance Cade, as amended. is hereby renumbered 3,
Section 250 and the sechons subsequent thereto are accordingly renumbered until Section 247,
which shail be renumbered as Secticn 252

SEG. 60. Section 248 of The Insurance Code, as amended, is hereby renumbered as Section
253 and a new last paragraph 's added to read as follows:

“No insurance company, fe or noniife, or any professional reinéurer, ordered 1 be
iquidaled by the Commissioner under’ the provisions hereunder may be rehblitated or
authorized to transact anew, insurance or reinsurance business, as the case may be”

SEG. 61. The old Section 249 of The insurance Code, as amended, is herelty renumbered 2s
Sesuon 254 and the seclions subsequent thereto are accordingly renumbered until Section 270,
which shall be renumbered as Section 276.

SEC. 62. Section 271 of The Insurance Code, as amended, is hereby renumbered 2s Section
277 and iis peragraphs (4) and (8} are amended to read as follows:

*(4) The presence in person or by proxy of five per confum of the members entilad to vote at ary
meeting shal constitute a quorum for the transaction of business, including the amendment of the
Rtclec of incorporation and/or the by-laws, unless otherwise provided by the by-laws.” and

+{8) A insurers mutualized under the provisions of this chapter shall be subject to ail other
‘applicable provisions of this Code, The provisions of the Corporation Code shall apply in 3
suppletory manner.”

SEC. 63. The old Section 272 of The Insurance Code as amended, is hereby renumbered 28
Section 278

SEC. 64. Anew Section 279 of The Insurance Code, as amended, is hereby added te read as
follows:

“See. 279. A domestic mutual Wfe insurance company doing business in the Phikppines

may conver itself into an incorporated stock lie insurance company by demutuatization To that ;
Trg it may provide and carry out 4 pian for the conversion by complying wilh the requirernents of

this Tite.


“The conversion of a domestic mutual life insurance company to an incorporated stock
le insurance company shill be camed out pursuant to @ conversion plan duly approved by the
‘Commissioner

“The Commissioner shall promulgate such rules and regulations as he or she may deem
necessary to cerry out the provisions of this Tite, after due consultation with representatives of
the insurance industry

“AN converted insurers under the provisions of this Title shall be subject to all ather
applicable provisions of Code. The provisions of the Corporation Code shatt apply in a supplelory
manner.”

SEC. 65, The old Section 273 of The Insurance Code, as amended, is hereby renumbered as,
Section 280 and the sections subsequent thereto are accordingly renumbered until Section 275,
which shall be renumbered as Section 282

SEC. 66. Section 276 of The Insurance Code, as amended, fs hereby renumbered as Section
263 and amendad to read as follows:

“Sec. 283. The Commissioner shail cause an examination of the books and records ot
the withdrawing company. and if, upan such examination, ihe Commissioner finds that the insurer
has no outstanding flabilties to policyholders and creditors in the Philippines. and no policies
uncancelled. or its primary labiities have not been reinsured and assumed by another insurance
company authorized to transact business in the Philippines, as required in the preceding section

ft chall cancel the wthdrawang comoany's certficate of authority, if unexpired, and shall permit the
insurer to withdraw. The cost and expenses of all such examination shall be pai¢ as prescribed in
section [four hundred seventeen]."

SEC. 67. The old Section 277 of The Insurance Code, as amended, is hereby renumbered 3s
‘Section 284 and the sections subsequent thereto are accordingly renumbered until Section 279,
which shall be renumbered as Section 286.

SEC. 68. Section 280 of The Insurance Code, as amended, is hereby renumbered as Section
287 and amended to read as follows:

“Sec. 287. Except as otherwise provided in this Code, no person. partnership, assccialion
cor corporation shall transact any business in the Philppines as 2 professional reinsurer unbi
Ghal have obtained  certifeste of authority for that purpose trom the Commissioner uson the
Suplication therefor and payment by such person, partnership, association oF corporation of the
face hereinafter prescribed. AS used in this Code, the term “professional reinsurer* shal mean
Bay person, partnershio, association of corporation thal tansacis solely and exctusively
Teinsurance business in the Phdippines.

“The Commissioner may refuse to issue a certificate of authority to any partnership,
‘association ar corporation if, in his judgment, such refusal will best promote public interest. No
sick certificate of authosty Shall be granted to any such partnership, association or corparation
Sniess and until the Commissioner shall have satisfied himself by such examination as he may
make and such evidence as he may require that such partnership, association or corporation 1S
qualified by the laws of the Philippines 0 transact business therein as a frofessional reins.rer.

‘Before issuing such certificate of authority of the Commissioner must be satisfied ‘nat
the name of the applicant is not thal of any otfter known company transacting insurance or



reinsurance business in the Philippines, of a name so similar as to be caiculated to mislead the
publ

“The cetlificate of authonty shall be valid unless sooner revoked of cancelled by the
Commissioner ‘

Every such partnership, association, of corporation receiving such cericate of authority
shall be subject fo the provisions of this Code and other related laws, and to the jurisdiction and
supervision of the Commissioner.”

SEC. 69, Section 281 of The Insurance Code, as amended, is hereby renumbered 2s Seclion
288 and amended to read as follows: :

“Sec, 283. Any parinership, association, or corporation authorized to wansact solely
reinsurance business must have a capitalization of at least two bition pesos, paid in cast. of
Tinich at least fity per centum consists of paid-up capital and the remaining potion thereof as
 eerbeled surplus which in no case shall be less than four hundred rnilion pesos or such
ceiraizstion 2& may be determined by the Secretary of Finance, upon the recommendation of
the Commissioner, Provided, That twenty-fve per centum of the paid-up capital must be invested
ae seintos satisfactory to the Commissioner, consisting of bonds or other evidences of debt of
the Goverment ef the Philippines or its poitical subdivisions or instrumentalities, or 0
Governmentowned of controled corporations and entties, including the Bangko Sertal ng
Mapas, and deposited wth the Commissioner. and the remaining seventy-five per centum i:
can athor seourties 2s may be allowed and permitted by the Commissioner. whica secunties
Seet ct al tenes be maintained free fom any lien or encumbrance: Provided, That the aforesei¢
Capital requirement {s ufthout prejudice te other requirements to be imposed under any rake
based capital method that may be adopted by the Commissioner: Provided. Finally. That the
provisions of ths chapter applicable 10 insurance companies: shal So far as practicable be
ikewise applicable to professional reinsurers.”

SEC. 70. The old Section 262 of The Insurance Code, 0s amended, is hereby renumbered as
Section 289 and the secions subsequent thereto are accordingly renumbered untii Section 298,
which shall be renumbered as Section 305,

SEC. 74. Section 298 of The Insurance Code, as amended, is hereby renumbered 36 Sector
306 and ite second paragraph is amended to read as follows:

*No insurance company dong business in the Philippines, nor any agent thereof. shal
pay any commission or other compensation to any person for sences in obtaining waurance
Palos such person shail have first procured from the Commissioner @ license to act as 20
neurgnce agent of such company or as an insurance broker as herematter provided | AB
naurance agent is an independent contractor anc not an employee of the company represented
Sinsurance agent’ includes agency teader, agency manager, oF their equivalent

No person shall act as an insurance agent or as an insurance broker in the sotictation or
procurement of applications for insurance, oF receive for services in obtaining insurance, any
Penmission oF other compensation ftom any insurance company doing Business in the
Prifpoines, or any agent thereof, without frst procuring a Hoerse to act from the Commissions,
vinich must be renewed every five years thereafter. Such license, which shall ipso facto exnire
non termination of the agents agreement wh the insurance company, shall De fssuec By the
CGanmissionet only upon te written application of the person desiring &, such application # for
Keone to act as insurance agent, being approved and countersigned by the company such
person desires to represent, and shall be upon 2 form prescribed by the Commissioner SMG
cee omation as he may requira, and upon payment of the corresponding fee hereinafior
prescrived. The Commissioner ehall Sabsly himself as to competence and trustworttiness of the



applicant and shall have the right to refuse to issue or renew and to suspend or revoke any such
license in his discretion.”

SEC. 72. A new Section 299-A of The Insurance Code, as amended, is hereby added (a read 3s
follows

“The provisions of Sections 299 and 300 shall apply to an employee wo shail be
‘engaged to sell insurance products by an insurance company.

sgince the insurance industry is imbued with public interest, the insurance companies
upon approval of the Commission may exercise wide latitude in supervising the activibes af cher
insuranoa agents lo ensure the protection of the insuring public.”

SEC. 73. The old Section 300 cf The insurance Code, as amended, is hereby renumbered 3s
‘Section 307 and the sections subsequent therelo are eccordinaly renumbered untl Section 316,
which shail be renumbered as Section 323.

SEC. 74, Section 317 of The insurance Code, as amended, is hereby renumbered as Section
324 and its first paragraph is amended 10 read 2s follows:

“A contiicate of registration issued to @ resident agent shail expire on the thiieth day of
June of the tifth year following its issuance uniess it is renewed.”

SEC. 75. The old Section 318 of The insurance Gode. as amended, is hereby renumoarec as
‘Socton 225 and the sections subsequent thereto are accordingly renumbered uns Secon 327.
‘ywnich shal be renumbered as Sector 334

SEC. 76, Section 328 of The insurance Code, as amended, is hereby renumbered as Section
336 and amended to read 2s follows:

“Sec, 336, Any adjuster’s license issued hereunder shall be valid until afler the thirieth
day of June of the fifth year following the ssuance of such licens unless its renewed: Provided
thet. such ficense shall ipso facto expire uoon termination of the dependent adjusters
Spreemeat with the msurance company, or of bie public adjusters agreement with the insures, 2s
the case may be.”

SEC. 77. The oid Section 229 of The Insurance Code, as amended, is hereby renumbered 3s
Section 336 and the sections subsequent thereta are accordingly renumbered until Section 336,
which shall be renumbered as Section 342

SEC. 78, Section 336 of The insurance Code, as amended. is hereby renumbered as Section
343 and is second paragraph is amended to read as follows:

“No certificate of registration issued under this ttle shall be vahd after the thitieth day of
June of the fifth year following its issuance unless # & renewed.”

SEC. 79. ‘The old Section 337 of The Insurance Code, as amended, is hereby renumbered as
Section 344 and the sections subsequent thereto are accordingly renumbered until Section 364,
which shall be renumbered as Section 371

SEC. 80, Anew Section 372 of The Insurance Code, as amended, is hereby addec to read as
fattows:

“Sec. 372. The Commissioner, in consultation with the duly accredited associaGons
cepeesenting the insurance industry, shall edapt and promulgate a cade of conduct to oromote



integhty, honesty and ethical business practices among insurance agents, distributors and othe:
intermediaries."

SEC. 81, Anew Tile on Bancassurance and Sections 373 to 375 of The Insurance Code, as
amended, are hereby added to read as follows:

“Title 9
“BANCASSURANCE

“Sec. 373. The term “pancassurance” shall mean the presentation and sale to bank
customers by an ingurance company of is insurance products within of outsiée the premises of
Hatem thos of such bank duly licensed by the Bangko Sentral ng Pilipinas or any of its
trarehes under such rules and regulations which the Commission may promulgate, To engage
eerrantassuranee, the bank * not required to have equity ownership af the insurance company
Nee ee company shal engage in the business of bancassurence unless it possesses all the
requirements as may be prescribed by the Commission,

*No insurance product under this Section. whether life or norvife, shail be issued or
delivered unless in the form previously approved by the Commission.

+gee. 374. Personnel tasked to present and sell insurance products wittin the bank
premises snail be duly licensed by the Commission and shall Be subject to the rules and
regulations of this Act.

+See. 375. The Commission, in coordination with the Bangko Sentral ng Pilipinas, shalt
promulgate rules and regulations lo effectively Supervise the business of bancassurance.”

SEC. 82. Chapter of the Insurance Code. “Security Fund”, consisting of Sections 365 up to 372
hereby deleted,

SEC. 83. The old Section 373 of the Insurance Code, as amended, is hereby renumbered a8
Section 376 and the sections subsequert thereto are accordingly renumbered until Section 412,
‘which shall be renumbered as Section 415.

‘SEC. 84, Section 412 of The Insurance Code, as amended, is hereby renumbered 28 Section
424 and amended to read as follows.

“Sec, 416. All trustees shal before entering in the performance of the duties of their trust,
obtain a certificate of registration from the Commissioner.

saa provisions of this Code goverung mutual benefit associations and such other
provisions herein, whenever practicable and necessary, shal be applicable to busts for charitable
uses.”

SEC. 85. Anew Section 425 of The Insurance Code, as amended, is hereby added to read as
follows"

sgec. 417. The treasurer of a chartable trust shal file a fideliy bond in the amount
commensurate with the Value of the ust property in his custody, a5 may be determined By the
Commissioner.”

SEG. 86. A new Chapter on Trust Business in General and Section 418 to 422 of The Insurance
Code, as amended, are hereby added to mad as follows:



“Chapter Vill
“TRUST BUSINESS IN GENERAL

“See. 418. An insurance company duly authorized by the Insurance Commissicn “nay
engage in ust business, which trust business shall be separate and distinct trom the general
pusinuss of the insurance company, without need of securing 2 license fram the Bangko Sentral
pq Pilpinas. The insurance company shall act 2s a trustée of administer any trust or hold
property in trust or on deposi for the use, benef, or behoof af others. For purpases of this Act
Such separate, distinct and duly authorized trust business shall be referred to as a trust entity.

“Sec, 419. A trust entity shall administer property under its custody with the diligence that
aims. No Woat emily SAN, WL Ule dean wr Wak cemetermenn nk a Jive ghacantar and sath eitrila”

Suauice property from, of sel, transfer, assign OF lend money or property 10, oF purchase debt
inehurrents of, any of the departments, directors, afficers, stocknolders, or employees of the trust
cenit, relatives within the frst degree of consanguinity oF affinity, or the celated interests, of such
Girectors, officers and stockholders, uniess prior to the transaction, such transaction is specifically
Guthonzed by the trustor and the relatonship between the trustee and the other carty involved in
the vansaction is fully disclosed fo the tustor of beneficary of the tust The Insurance
Commincion shall promulgate such rules and regulations as may be necessary to regufate the
conduct of trust business by insurance companies.

“See, 420. The trust business and ali funds, properties or securities received by any trust
entity as executor, administrator, trustee, racoives, of depositary shalt be kept senarats and
istinct from the general business of the insurance company, or alled Insurance corrpany
treluding all other funds, propertes, and assets of ¢uch tust entity. The accounts of all such
funds, propetiies, or securiies shall ikewise be kept separate and distnct from the accounts of
the general business of the trust entity

“Sec, 421. Unless otherwise directed by she instrument creating the trust, the fencing
and investment of funds and other assets acquired by a trust enfily 2s executor, administrator, oF
size, shal be limited to loans or mvestments as may be prescribed by law, and/or the
insurance Commission.

"Sec, 422, No assets held by a trust entity in its capacity as trustee shali be subject fo
any claims other than those of the partes interested in the specific lusts”

SEC. 87. Anew Chapter on Registration, Responsibilities and Oversight of Selt-Regutatory
Granizatons and Sections 423 to 429 of The Insurance Code, as amended, are hereby acted
to read as follows:

“Chapter IX
“REGISTRATION, RESPONSIBILITIES AND OVERSIGHT OF SELF-REGULATORY
ORGANIZATIONS

“Sec. 423. The Commissioner shall have the power to register as a self-regulatory
organization, of otherwise grant licenses, and lo regulate. supervise, examine. suspend oF
otherwise discontinue, as @ condition for the operation of organizations whose operations are
elated to or connected with the insurance market such as but not fimited to associations of
insurance companies, whether life or non-life, reinsurers, actuaries, agents, brokers, dealers,
Imutuel benefit associations. tusls. raling agencies, and olher persors regulated by the
Commissioner, which are engaged in the business regulated by this Cade,

“The Commigsioner may prescribe rules and regulations which are necessary of
appropriate in the public interest or for the protection’ of investors te gover séiFrequiatory

i



organizations and other organizations licensed of regulated pursuant fo the authorky granted
ceeannder including but not ‘imited to the requirement of cooperation within and among ail
poricipants in the insurance market to ensure tansparency and factitate exchange of
information.

“Sec. 424, An association cannot be registered as 2 self-regulatory organization unless
the Commissioner determines that:

*{a} The association is so organized and has the capacity to be able to carry out the
purposes of this Cade and to comply with, and to enforne compliance by its members and
Parsons associated with is members. with the provisions of this Cade, the rules and regulations
thereunder, and the rules of the association

“(o) ~The rules of the association, nowithstanding anything in the Corperaton Cove to
the contrary, provide that

(Any eniity possessing the cualifications set oul in the rules and none of the
disqualifications may become 2 member of the association;

(i) There exists 2 fair representation of its members to serve on the Board of Drectors of the
associaton and in the administration of its affairs, and that any natural person associates
‘ith a juridical entity that is a member shall himself be deemed to be @ member for this
purpose;

ui) The Board of Directors of the association includes in its compositon (a) the president of
the association and (b) af least 2 independent directors;

(wv) For the equitable allocation of reasonable dues, fees, and other charges among
frembers and offer persons using any facility or system which the association operates
or controis;

(v) For the prevention of fraudulent and manipulative acts and practices. the promation of

Just and equitable principles of business, and, in general, the protection of the instsring
public;

(vi) That ite members and persons associated with ts members shal be appropriately
disciplined for violation of any provision of this Code, the rules or regulations thereunder,
or the rules of the association,

(vil) That a fair procedure for the disciplining of members and persons associated wit
fnombers, the denial of membership to any person seeking membership therein, the
baring of any person from becoming associzted with 2 memoer thereo!, and the
prohibition or limitabon by the association of any person with respect to access to
Services offered by the association or a member thereof.

“See. 425. A self-requistory organization may examine and verify the qualificabons of an
applicant to became a member in accordance with procedures established by the rules of the
association.

=A, self-regulatory organization shall deny membership or conditon the membership Of. 2
entity, ifthe entity

() Bows not meet the standards of financiat responsibility, operatonal capabuity, taining
experience, of competence that are prescribed by the rules of the assoctabon: Or

4



(i) Has engaged, and there is a reasonable tikelthood it will again engage, in acts oF
practices inconsistent with just and equitable principles of fair trace

“A self-regulatory organization may deny membership to an entity not engaged in 2 type
of business in which the rules of the association require members to be engaged

“Sec 426. Upan the fing of an application for registration as a self-regulatory
organization under this Thle, the Commissioner shall have ninety {90) days within which to either
Grant ragisvation or institute a procteding to determine whether regisvation should be denied. te
the event proceedings are instituted, the Commissioner shail have two hundred seventy (270)
days within which to conclude such proceedings at which time i shall, by order, grant oF sexy
such registration.

“Sec. 427. Every self-regulatory organization shail comply with the provisions of this
Code, the rules and regulations thereunder. and its own rules, and enforce comafance therewith
notwihstanding any provision of the Corporation Code te the contrary, by is members, persons
associated with its members or its participants.

“See. 428. Each self regulatory organization shall submit to the Commissioner for poo
approval any proposed rule or amendment therelo, together with & concise statement of the
reason and effect of the proposed amendment.

‘within sixty (60) days after submission of a proposed amendment, the Commrssiore:
‘shal, by order, approve the proposed amendment. Otherwise, the same may be made effective
by the self-regulatory organization.

“in the event of an emergency requiring action for the protaction of the insuring public, 2
selt regulatory organization may put a proposed amendment into effect summanty: Provided,
however, That a copy of the same shall be immediately submitted to the Commissioner, &

“The Commissioner is further authorized, if after making appropriate request in writing to
a self-regulatory organizaton that such organization effect on its awn behalt specified changes »
fe rules and practices and, after due notice and hearing il determines that such changes have not
toon effected, and bat such changes are necessary, by cule oF regulation or by order, may alter,
2brogate oF supplement the rules of such setf-eegulatory organization Ir sq far as nevessary or
Appropriate to effect such changes in respect of such matters as:

fa) ‘Safeguards in respect of the financial responsibility of members and adequate
provision against the evasion of financial responsibity trough the use of corporate forms or
special partnerships;

«

‘The supervision of market practices:
“{e)__ The manner, method. and place of soliciting business:

*{d)__ The fixing of reasonabie rates of fees, taterest, fisting and other charges, but not
rates of commission: and seif-reguiatory organization

*(e) The supervision, auditing and discipining of members.

«in addiion to the general powers of the Commissioner over the entties under histher
supervision, the Commissioner, after due notice and hearing, is authorized, in the publi: interest
and to protect insuring public:



(a) To suspend for 8 period not exceeding twelve (12}, months of to revons he
registration of a sel-requlatory organization. of to censure oF impose limitabons 0 the activites,
aaa eee nd operations of such self-requiatory organizaton, if the Commissson finds that Sut 2
seifreguiatory organization has wilfully vivaied oF is unable to comply with any provision oF Wis
Sa a of ihe rules and regulations thereunder, or its own rules, oF has faied to enforce
cCinpliance therewith by a member of, person associated with a member. oF a participant m such
self-regulatory organization:

*{) To expel from a seltregulatory organization any member thereof or any
paricipant therein wo is found to have wilfully violated any provision of this Code of suspend for
Spend not exceeding twelve (12) months fer violation of any provision ofthis Code of any ther
ee dinanistered by the Commission, oF the rules and regulations thereunder, of affected
Srecty or indizectly, any transaction for any person who, such member or participant had reason
fo believe, was violating in respect of such transaction any of such provisions: and

*ic) To remove from office or censure any oificer or director of a seltrequlatory
oxgenizaton iit fnds that such officer or drector has violated any provision of this Coce. any
Giber law administered by the Commissioner, the rules of regulations thereunder, of the rules of
such self-regulatory organization, ‘abused his authonty, or without reasonable justhcaton or
‘excuse has failed to enforce compliance with any ‘of such provisions.

gee. 428. (@) A self-regulatory organization is authorized to disciptne a member of or
partoipant in such sett-reguiatory organization, or any person associated with & member
Peuding the suspension or expulsion af such member oF participant, and the suspension of bor
Tram bang associated with a member, such person nes engaged in ects or practices
reonsistent wath just and equitable principles of faimess or in wilful violation of any provision of
the Code, any obher [aw administered by the Commission, the rules of regutations thereunder, oF
Te aise of he self-regulatory organization. tn any discipirary proceeding by a self reguiatory
Organization (other than a summary proceeding pursuant to paragraph (6) ofthis subsection) me
Sev-ragulatory organization shal orng specific charges, provide notice fo the perscn charged,
Srtord the person charged with an opportunity to defend against the charges, and keep a record
of ine proceedings. A determination to impose a disciplinary sanction shall be supported by 2
chitten ctatement of the offense, a summary of the evidence presented and a statemert of the
sanction imposed,

to) A setf-egulstory organization may summariy: (9 suspend @ member, participant
or porsan associated with a member who has been or is expelled or suspended rom any aher
Sef regulatory organization: or (i) suspend a member who the selt-regulatory organization fads
Tei Geach feancial or operating difficulty that the member or participant cannot be permed {©
Rhtnwe to do business as a member with safety to investors, creditors, other members,
fardipants or the self-regulatory organzaton: Provided, That the self-regulatory organzaton
rorrcately notiies the Commission of the action taken. Any person aggneved by a. sunmnary
eon pursuant ‘0 this paragraph shal be promptly afforded an opportunity for a hearing by We
aetoeetion in accordance with the provisions of paragraph (a) of this subsection, The
Ceeteniesioner, by order, may stay a summary action on its own motion or upon application by
serrmarson aggreved thareby. i the Commissioner determines summanly or after due notice and
ouring (which hearing may consist solely of the submission of affidavits Or presentation at oft
Grouments) that 2 stay i consistent with the public interest and the protection of the ‘osuring
public.

(0) A selt-regulatory organization shall prompiy notify the Commission of ary disciplinary
sanction on any member thereof or partcipant therein, any denial of membership or participabon
Hr cucn organization, or the imposition of any disciplinary sanction on a person associated with &
a etiker oF a bar of such person from becoming so associated. Within thity (30) days after such
Metice, any aggrieved person may appeal to the Commissroner from. of the Gommrssicner on 3s



‘own motion within such period, may institute feview af, the decision of the self-regulatory
Grgantzstion, at the conclusion of which, ater due notice anc hearing (which may consis: Foley of
Orsi of ine record before the seltreguatory organization}, the Commissioner shall aftr
reosity oF set aside the sancSion. in such proceading the Commissioner shall determine whother
the aggneved person has engaged oF omitted > engage in the acts and practices 3s found by tie
Seitrequlatory organization, whether such acts and practioes constitute wilful vokauons of fis
Code, any other law adminstered by the Commission, the rules or regulations thereunder, or the
cies of the self-regulatory organization as specified by such organization, whether such
provisions were applied ina manner consistent with the purposes of ths Code, and whether, with
aie regard for tre pubLC interest ond the protection of investors the sanction is excessive or
oppressive”

SEC. 88. Anew Chapter on Confidentiality and @ new Section 430 of The Insurance Code, as
amended, are hereby added ta read as follows:

“Chapter X
“CONFIDENTIALITY

“Sec, 430, All fe insurance companies doing business in the Prilipgines are hereby
required to inform persons applying for We insurance a8 well as persons proposed for insurance
that as part of the underwniting procedure, a report may be obtained by the insurance company,
frat wil provide wth applicable and relevant information regarding the person's health, made of
ting, and other personal background as gathered from the person himself. from the results of
ny requited physical examinabon, Fom the reports obtained from physicians or other medica)
Personnel, intitulions or foclties where the person had been attended, or, in general, from any
‘ether sources.

“AN these information in relation to the person's insurability shall be treated as
confidential and shall not be disclosed by the I#e insurance company. its directors. officers,
employees, agents, brokers, or other business pariness, in any form or manner, unless otherwese
fequired by law, by lawful order of a Court of competent jurisdiction, or upon the wien
Demmission of the person himsel, provided, however, that the insurance company may release
ce ennoton in its tle fo other Ife msyrance companies to whom the person may apply for ie,
detident or health insurance, or to whom a claim for benefits may be submitted.”

SEC. 89. A new Chapter on Taxation and a new Section 431 of The Insurance Code as
‘amended, are hereby added to read as follows.

“Chapter Xt
“TAXATION

“Seq 431, The death benefits received under a life insurance policy snail be exempt
from all taxes.”

SEC. $0. Chapter Vil! on The insurance Commissioner of The Insurance Code, as amended,
hereby renumbered as Chapter Xt!

SEC. 81. Section 414 of The insurance Code, as amended, is nereby renumbered as Section
432 and amended to read as follows:

“Sec. 432 The Insurance Commissioner shall have the duty to see that all tows relating
to insurance, insurance companies and other insurance matters, mutual benefit associators. and
Wnts for charitable uses are farthfully executed and to perform the duties impased upon him by
this Gove, and shall, notwithstanding any existing laws to the contrary, have sole and exclusive
authorty to regulate the issuance and sale of variable contracts as defined in section [two



hundred thirty-two] anc to provice for the licensing of persons selling such contracts, and to issue
‘guch reasonable rules and regulations goveming the same.

“The Commissioner may issue such rulings, instructions, citcutars, orders and cecision
as he may deem necessary to secure the enforcement of the provisions of this Code, to ensure
fhe efficient regulation of the insurance industry in accordance with global best practices anc t0
protect the insuring publ, subject to the approval of the Secretary of Finance, Except 28
Pinenwise specified, decisions made by the Commissioner shalt be appeatable te the Secretary of
Finance.

“in addition to the foregoing, the Commissioner shall have the following powers and
functions:

+a) Formulate policies and recommendations on issues conceming the insurance
industy, advise Congress and other gavemment agencies on all aspects of the insurance
industry and propose legislation and amendments thereto:

p) Approve, reject, suspend revoke OF require amendments 0 regisiraton and licensing
applications provided for by this Code:

*c} Impose sanctions for the violation of laws and the ries, regulations and orders issued
pursuant thereto;

-d) Prepare, approve, amend or repeal rules, regulations and orver, and issue opimons
and provide guidance on and supervise compliance with such rules, tegulations and orsers:

a) Enlist and aid and supa of and/or deputize any and all enforcement agencies af the
Government, civil or military as well as any private institution, corporation, firm, association or
person in the implementation of its powers and functions under this Code;

“f) Issue cease and desist orders to prevent fraud oF injury to the Insuring public:

“g) Punish for contempt of the Commission, both direct and indirect, m accordance with
the pertinent provisions af and penatties prescribed by the Rules of Cour;

<n) Compel the officers of any registered insurance corporation or associaton to calt
meetings of stockholders or members thereof under its supervisions,

=} Issue subpoena duces tecum and summon witnesses te appear in any proceedings of
tne Commission and In appropriate cases, order the examination, search and seizure of ai!
Hocaments, papers, files and records, tax returns, and books of accounts of any entity or person
seer mavestigaton as may be necessary for the proper disposition of the cases before #, subject
to the provision of existing laws:

i) Suspend oF revoke, affer proper notoe and hearing the license or certificate of
authority of any entity oF person under its regulation, upen.any of the grounds provided By law,

-k) Conduct of examination to determine compliance with faws and reguiations ¢ the
circumstances £0 watrant as determined by appropriate Tules and regulations;

<) Regular investigation which shak not be offener than once a year from the last date of
examination 12 determine whether an instiution is conducting its business on a safe an sound
basis, Provided, That, the daficienciesfireguiarities found by or discovered by an aud shall be
immediately addressed,



m) Inguire into the solvency and liquidity of the instituticns under is supervision and
‘enforce prompt corrective action; and

sie) Exercise such other powers as may be provided by law as well as those which may

be impiied from. or which are necessary of incidental to the carrying aut of, the express powers
‘granted the Gornmission to achieve the objectives snd purposes of these laws.”

‘SEC. 92. The old Section 415 of The Insurance Code, as amended, is hereby renumbered 35
Secton 433 and the sections subsequent thereto are accordingly renumbered until Section 424.
which shall be renumbered as Section 442.

SEG. 93. This Act chall also amend the section numbers referred to in The insurance Code to
paflect the renumbering resulting from the amendments brought about by this Act”

SEC.94, Separability Clause. any provision or part hereot, is held invalid or unconsttubonal,
the cemeinder of the law or the provision not otherwise affected shall remin valid and subsisting,

SEC. 96. Repeaiing Clause. All laws, decrees, orders, rules and regulations or parts thereat
incorsistent with this Act are hereby amended or modified accordingly.

SEC. 96. Effectivity. This Act shall take effect 15 days following its publication in a newspaper of
general circulation, provided that the tax incentives granted hereunder shall take effect on

Approved.

of