Amending Certain Sections Of Act Numbered Twenty-Four Hundred And Twenty-Seven, Otherwise Known As The Insurance Act, As Amended

Case Overview and Summary

Summary of Presidential Decree No. 63

Amending the Insurance Act

I. Policy and Purpose (Preamble)
- To promote and develop a strong national insurance industry.
- To provide necessary operating conditions for integration into economic and social development.
- To ensure solvency of insurance companies doing business in the Philippines.
- To prevent or minimize outflow of foreign exchange.
- To coordinate insurance company policy with government investment policy.

II. Provisions on Insurance Policies and Contracts (Sections 1, 10, 11, 12, 13)
- Defines a "policy of insurance" as a written instrument setting forth the insurance contract (Section 1).
- Prohibits binding riders, clauses, warranties, or endorsements not typewritten on the policy (Section 1).
- Allows claims up to 20,000 pesos for minor beneficiaries without a judicial guardian (Section 10).
- Defines "industrial life insurance" as policies with face amount up to 3,000 pesos (Section 11).
- Allows variable contracts to be issued on an industrial life basis (Section 12).
- Defines "variable contract" and sets requirements for insurers to issue them (Section 13).

III. Regulatory Powers and Duties of the Insurance Commission (Sections 2, 3, 4, 5, 6, 7, 8, 9, 14, 17)
- Grants the Insurance Commission power to enforce laws, issue rulings, and adjudicate claims up to 100,000 pesos (Section 2).
- Requires insurers to obtain a certificate of authority from the Commission to operate (Section 3).
- Allows the Commission to revoke or suspend certificates and appoint an administrator (Section 4).
- Outlines grounds and procedures for liquidation of insurers by the Commission (Section 5).
- Requires insurers to annually file statements and publish synopses (Sections 8, 9).
- Prohibits unauthorized insurance business; requires reinsurance with local companies (Section 14).
- Allows the Commission to publish applications for withdrawal of securities deposits (Section 17).

IV. Capital and Reserve Requirements (Sections 15, 16)
- Requires domestic stock insurers to have paid-up capital of at least 2 million pesos (Section 15).
- Allows increasing minimum capital and requiring contributed surplus fund (Section 15).
- Outlines investment requirements for reserves and surplus based on insurer type (Section 16).

V. Regulations on Foreign Insurers (Sections 6, 7)
- Requires foreign insurers to deposit securities worth at least 2 million pesos (Section 6).
- Limits investments in registered enterprises and requires local asset reserves (Section 7).

VI. Penalties and Violations (Sections 3, 18)
- Imposes fines up to 10,000 pesos and imprisonment up to 6 months for violations (Section 3).
- Penalizes unauthorized insurance business with fines and imprisonment (Section 18).