The Insurance Commission is a Department of Finance (DOF) associated agency. The authority regulates the insurance business in the Philippines and supervises the operations of the country’s Life Insurance and General Insurance companies.
The agency’s major goal is to defend policy holder interests while also regulating the insurance business. Read on to discover about the apex body of insurance providers in the Philippines, as well as the many responsibilities and roles of the insurance commission in the Philippines insurance market.
What is the Insurance Commission, and what does it do?
The Insurance Commission is the main organization or executive body that regulates the insurance sector in the country. It sets rules and regulations for the functioning of the insurance industry. Its sole purpose is to protect the interest of policyholders and to develop the industry on the whole.
In the event that the laws and regulations change, the Insurance Commission offers advice to insurance companies on a regular basis. The regulator assists the insurance industry in improving efficiency in the conduct of insurance business while also regulating insurance prices and other fees.
This article discusses the Insurance Commission’s functions, characteristics, and benefits, as well as providing answers to frequently asked questions towards the conclusion of this reading.
Brief History of Insurance Commission
The founding of Strachman, Murray & Co., Inc. in the Philippines Islands spurred the influx of foreign insurance businesses in the country by introducing the notion of insurance protection. With the arrival of Sun Life Assurance of Canada into the local insurance market in 1898, life insurance was launched.
The first domestic non-life insurance firm, the Yek Tong Lin Insurance Company, was established not long after, in 1906. In 1910, the Insular Life Assurance Co., Ltd., the country’s first domestic life insurance firm, was created.
The Philippines Legislature enacted Act 2427, popularly known as the Insurance Act, on December 11, 1914, in response to the fast-paced growth of the insurance sector in the Philippines. The articles of the Spanish Code of Commerce on Insurance were repealed by this Act, which went into effect on July 1, 1915.
The Insular Treasurer was designated as the Insurance Commissioner ex officio under the Insurance Act, in addition to his official title. The Insurance Division of the Bureau of Treasury was the government agency in charge of overseeing insurance companies in the country.
The Philippines’ insurance market attracted additional foreign insurance companies to set up shop there. Russel & Surgis was appointed as the Union Insurance Society of Canton’s representative in Manila in 1939, with the sole purpose of transacting non-life insurance business.
The Insurance Division was removed from the Bureau of Treasury and linked to the Bureau of Banking during WWII. The Division was handed to the Bureau of Treasury after the war. The government, however, realized the synergy and practical benefit of integrating the Insurance Division with the Bureau of Banking in 1947. As a result, the former was separated from the Bureau of Treasury once more and united with the Bureau of Banking.
Objective of Insurance Commission
- In the insurance industry, insurance agents and brokers keep a specific percentage of the premiums they generate as payment. Acquisition cost is another term for acquisition cost.
- In reinsurance, the primary insurer typically pays the reinsurer a percentage of the gross premium received on a risk.
- The reinsurer then gives the company a ceding or direct commission allowance on the gross premium received, which is big enough to cover the commission paid to the agents, plus taxes and overhead.
- The amount of such an allowance typically determines the reinsurer’s profit or loss.
The Insurance Commission Plays an Important Role in the Insurance Sector in the Philippines:
The Philippine insurance sector dates back to the early 1900s and has evolved over time with increased openness and an emphasis on policyholder protection. When it comes to drafting rules and regulations, the agency plays a critical role in emphasizing the importance of policy holders and their interests. The Insurance Commission has a number of essential responsibilities:
- To safeguard the interests of the insured.
- To assist in the orderly growth of the insurance business for the benefit of the general public.
- To give long-term financing to help the country’s economy grow.
- Promoting, establishing, enforcing, and monitoring high standards of integrity, fair dealing, financial soundness, and insurance provider competence.
- To ensure that legitimate claims are resolved quickly and efficiently.
- The Insurance Commission has established a grievance redress forum to protect policy holders from malpractice and fraud.
- To encourage the financial markets to conduct insurance in a transparent, fair, and methodical manner.
- To create a dependable management system that ensures good quality
Functions of Insurance Commission
The Insurance Commission performs the following major tasks in the Philippine insurance industry:
- The insurance firm can grant, renew, modify, suspend, revoke, or withdraw registration certificates.
- Protecting the policy holder’s interests in topics such as policy grant, claim settlement, nomination by policyholders, insurable interest, policy surrender value, and other policy terms and conditions.
- For mediators or insurance agents, provide a code of conduct, credentials, and training.
- A rule of conduct for loss assessors and surveyors should be established.
- Imposing fees and charges in order to carry out the Act’s provisions.
- Inspections, requests for information, and investigations of insurance companies, middlemen, and other organizations involved in the insurance sector, including an audit.
- Regulate and control insurance premiums, terms and circumstances, and any benefits that insurance companies may offer.
Insurance Commission Features and Benefits:
The Insurance Commission has the following characteristics:
- Acts as an insurance sector regulator.
- The policy holder’s interests are safeguarded.
- The Insurance Act entrusts it with issuing certificates of registration to new insurance businesses seeking to operate in the Philippines.
- Oversees the activities of the insurance industry to guarantee that insurers and policyholders continue to grow.
The Insurance Commission regulates the following types of insurance
Insurance is mainly divided into Life and Non-Life/General Insurance. These are further classified into other types of insurance. Below are the types of insurance worked by the Insurance Commission:
- Term Plans
- Endowment Policies
- Unit-linked Insurance Policies
- Retirement Policies
- Money-back Policies
- Health Insurance Policies
- Vehicle/Motor Insurance Policies
- Car insurance
- Bike Insurance
- Property Insurance Policies
- Travel Insurance Plans
- Fire Insurance Plans