6 sue nsuRANCECODEOFTHEPHILIPINES ANNOTATED Sex 3053 hticense in his discretion. The suspand or evoke any ste thirty-first day of December ‘third year following the date of issuance unless it is jewed in the case of the company nts, and in the case of Insurance jon of the said brokers, Licenses may be ren represented by such age! brokers, upon the APP! themselves. (n) SEC. 308, The provisions of Sections 307 and 30g shall apply to an employee who shall be engaged to sell insurance products by an insurance company. (n) ‘SEC. 309, Any person who for compensation solicits ance on behalf of any insurance company to a person other than himself an application for a policy or contract of insurance to or from such company or offers or assumes to act in the negotiating of such insurance shall be an insurance agent within the intent ofthis section and shall thereby become liable to all the duties, requirements, liabilities and penalties to which an insurance agent is subject ‘An insurance agent is an independent contractor and iployee of the company represented. “Insurance agent” includes an agency leader, agency manager, or ‘heir equivalent. (n) Since the insurance industry is imbued with public interest, the insurance companies upon approval of the Commissioner may exercise wide latitude in supervising the activities of their insurance agents to ensure the protection of the insuring public. (n) SEC. 310. Any person who for any compensation, commission or other thing of value acts or aids in any ‘manner in soliciting, negotiating or procuring the making of any insurance contract or in placing risk or taking out insurance, on behalf of an insured other than himself, shall bbe an insurance broker within shall thereby become liable to all the duties, requirements, liabilities and penalties 2 : epitles and penalties to which an insurance brok can SALES AGENCIES AND TECHNICAL SERVICES Secs. 307310 Insurance Agents and Insurance Brokers Insurance agents and brokers. ly. — The business of buying and selling insurance is almost entirely carried on by insurance agents, brokers, solicitors, and other persons who act as representatives of sellers or of buyers. The principles of the general law on agency apply to the relationship of insurers and insurance companies on the ‘one hand and their agents on the other. (43 Am. Jur. 2d 198.) the relations between insurance companies and follows that the Insurance Commissioner canni of its quasi-judicial powers underSection 416, assume jurisdiction over controversies between the insurance companies and their agents. (Phil. American Life Ins. Co. vs. Ansaldo, 234 SCRA 509 f1994}.) (2) Insurance agent. — So far as the insurer is concerned, the authorized to ‘These agents are of various kinds and classe as general, special, local, resident, soliciting, collecting, and adjusting. The definition of an insurance agent under Section 309 holds true with respect to the agent mentioned in Section 307. It is a definition and interpretative clause intended to qualify the term “agent” mentioned in Section 307. The criminal information charging a person of insurance solicitation without having first secured a license to act as an insurance agent from the Commissioner must state that it was, for compensation; otherwise, no conviction is warranted. Itis, ‘well settled that to warrant conviction, every element of the Appeals, 113 SCRA 459 [1982].) (b) surance company may have two classes of agents who sell its insurance policies: salaried employees who keep registered represent of the company, an (Great Pacific Life Assurance Corp. ‘on commission ba:ers THEINGURANCE CODE OF THEPHILIPPINES ANNOTATED See. 307 a4) |.) The first is not require . Judico, 180 SCRA 445 [1989] ‘i 2 nace for acting as such agents. he tlotonship. te Under the first category, the relationship he dene cmpany and its agents is governed by the contract of employment and the provisions of the Labor Code, while under the second category, the same is governed by the contract of agency and the pertinent provisions of the Civil Code, Disputes involving the latter are cognizable by ‘American Life Ins. Co. vs. Ansaldo, (6) An insurance agent may become an employee of ‘an insurance company if evidence exists showing that the ‘company promulgated rules or regulations that effectively control or restrict as insurance agent’s chance of methods or the method's themselves in selling insurance. In such a case, the determination of the existence of employer-employee relationship is thus on a case-to-case basis depending on the evidence on record. (Tongko vs. The Manufacturers Life Insurance Co. [Phils], Inc, 62 SCRA 58 [2010].) (@) There are built-in elements of control specific to an insurance agency which do not amount to the elements of control that characterize an employment relationship governed by the Labor Code. The Insurance Code provides definite parameters in the way an agent negotiates for the sale of the company’s insurance products, his collection activities and his delivery of the insurance contract or policy. (see Secs. 309, 310, 315,) In addition, the Civil Code defines an agent (Art. 1887 thereof.) and provides that the agent shall act in 2 the specific rules and regulations that are enforced by an insurance company against insurance agents or managers ae such that would dicey affect the mean and 2008 decision on Tune 29,2010 The mation or bythe peutioner was denied by the Supreme Cour ofan os 'AGENCTES AND TECHNICAL SERVICES Ga Insurance Agents and insurance Brokers accordance with the instruction of the principal. (Art. 1887, ibid.) All these speak of control by the insurance company agents, but they are controls aimed only at specific results in undertaking an insurance agency, and are, in fact, parameters set by law in defini surance agent and the attendant duties and responsi ‘on insurance agent must observe and undertake. They do not reach the level of control into the means and manner of doing an assigned task that invariably characterizes an employment relationship as defined by labor law. Thus, an insurer's instructions regarding the objectives and sales target, in connection with the aiming and engagement of other agents, do not necessarily intrude into the insurance agents’ means and manner of conducting ir sales. (Tbid., 40 SCRA 395 [2011].) ) Payment of claims arising from the peril insured which the insurer is liable, is definitely not one of, ities of an insurance agent. (Pandimin Philippines, Marine Manning Management Corp., 460 SCRA 418 isurance broker. — The term refers to one who acts as man between the insured and the insurer, and who surance from the public and either places the insurance ‘a company selected by the insured, or in the absence of any selection by him, then with the company selected by stich broker. (43. Am. Jur. 2d 199.) (a) An insurance broker, by definition under Section 310, issue policies nor can it involve itself in the process suance. Only insurance companies and their general agents, in some cases, are allowed to issue insurance policies. ‘An insurance company cannot allow an insurance broker to issue policies in its behalf either tacitly or by a special power of attorney or by any other instruments. (Ins. Cir. Letter No. 11-94, April 25, 1994.) (b) The insurance broker in theory represents the insured (see Sec. 310.) and not the insurance company. So, where a renewal notice was broker but the latter did not relay the information to thececODEOFTHEPHTLPPINES ANNOTATED, Sa, (eo THEINSURAN' toss occurring after the expiray ingurance company hake the company liable becuse oF the policy was not renewed. Bro es pyers of te insurance companys are not salaried emp OF" erent legal relationshiy different leg: ship with consequently they Hn the insurance industry, however? The prac forthe insurance company agents and brokers. ine when he deals with an applicant { onde the applicant’s agent. A broker may fouever, be an agent of the insured for some purpose, wet the agent of the insurer for others, or he may purpor, to represent only the insurer. Dual agency is not prohibited 50 long as the agent’s duties’ owed two principles are not incompatible. A broker may be either an insurance broker or a reinsurance broker. A reinsurance broker is defined in Section 319. (a) As explicitly prescribed by Sections 307 and 315, the role for which an insurance agent may bi such by the Insurance Commission is just to sol or negotiate insurance in behalf of an insurance company \cidental thereto, such as to pay the commission of baie or bonds issued, or assume the specific role of as defined under Section 190 as to include all individuals, partnerships, associations or corporations engaged as principals in the insurance business and as such can only be licensed to enter into an agreement to undertake, for @ ration, to indemnify another against loss, damage, or lity arising from an unknown or contingent event. - In view thereof, all insurance companies are enjoined m— _ 1) requiring their insurance agents to assume liability under, or 2) demanding from their insurance agents the i gent reimbursement of the amounts paid on claims arising 6st AGENCIES AND TECHNICAL SERVICES “surance Agents and Insurance Brokers ss or bonds issued. (Cir. Letter No. 12/88, (4) Distinctions. — A broker sustains no fixed and permanent ‘employment by, or relation to, any principal, but holds himself ‘out for employment by the public generally, his employment in each instance being that of a special agent for a single object, whereas an agent sustains a fixed and permanent relation to the ipal whom he represents and to whom he owes a permanent wued allegiance. In other words, the second is tied to company. Every insurance broker is in a sense an agent but the latter term is the more generic, and every insurance agent is not a broker. (43 Am. Jur. 2d 199.) Regulation of insurance agents ‘and brokers. (1) Licensing. —The right of a state to regulate and control the insurance business includes the right to regulate and control the agents and brokers through which such business is carried on. (O'Gormon & Young v. Hartford F. Ins. Co., 282 US 251.) Thus, the State has the right to require that all persons who engage in the insurance business within its borders first secure a license from a designated authority authorizing the engaging in such business, (Robertson v. California, 528 US 440.) It may prescribe the qualifications requisite for the granting of such license. All insurance and reinsurance brokers applying for issuance or renewal of license are required to include among their primary purposes the purpose to act as insurance or reinsurance broker and to include in the business, corporate name the descriptive words “insurance brokers” or “reinsurance broker” to properly represent the company’s operation, in order to avoid confusion among the insuring public. (2) Revocation or suspension of license? — The power to ing and fixing the qualifications of agents enact laws presc and reinsurance brokers are required to submit a ments covering the results of operations. In the year ‘yeas (Ins. Cit Letter No, 18.06 and No. 19-06, Maya szpesimancECODEOF THEPHILIPINES ANNOTATED Se, ap : f registrati a to obtain certificates of registration g ee A the power, after due notice and heating to revoke such certificates and licenses for cause. (see Secs, 314, eer.) The order or decision of the Insurane, must specificall ly find and state the act or acts of hose license is revoked i found guily, ang (dent that the revocation is made merely because the a oe i not “trustworthy.” Findings must be made as to the spuife actor acts which constitute the violation. (Goldman Pink, NYS 2d 562; see 43 Am. Jur. 2d 125-129.) Licensing requirements and limitations. (Q) No insurance company doing business in the Philippines, or any agent thereof, shall pay any commission or any Compensation to any person for services in obtaining insurance tunless such person shall have first procured from the Insurance Commissioner a license to act as an insurance agent (Secs. 307, 310.) variable contract agent, general agent, insurance broker (ec. 310.), or reinsurance broker (Sec. 319, par. 2.), as the case may be? (a) A “variable contract agent” is any person who sells or offers for sale variable contracts, as defined in Section of the Insurance Code, or does or performs any act or thing in the sale, negotiation, making or consummating of any such contract other than for himself. (©) A “general agent" is any person who, for compensation, solicits or obtains insurance on behalf of any insurance company or transmits for a person other than himself an ine eno" Cs. No. 10 alos the anc of ssc wiht ng the rguocd ee eae Shots ee hah Hav ocean ea een pt ue Ins. Memo. irs. No. 2010 prov pro prope nd ecg ne Buin fr he approval of aig Bee le ee ‘ecs.307:310 SALES AGENCIES AND TECHNICAL SERVICES ‘Title 1— Insurance Agents and Insurance Brokers application for a policy or contract of insurance to of from such company or offers or assumes to act in the negotiation of such insurance and empowered by such company to do such other acts and things for and on its behalf in the conduct of its business as specified in the general agency agreement executed by and between them. (see Sec. 307.) (2) No person shall act as insurance agent, etc. in the Philippines without first procuring a license so to act from the Insurance Commissioner. (@) Such license shall be issued only if, upon written application of the person desiring it and payment of the corresponding fee therefor, such person is found qu and not otherwise disqualified for such license. Such until midnight of 30th day of June of the year suance unless sooner revoked or suspended for cause, and may be renewed annually on the Ist day of January, or within six months thereafter. (see Sec. 307, par. 2.) (©) A license issued to a partnership, as (c. shall authorize Exercise or attempted exercise of individual not so named in the I or consent of the licensee shall constitute cause for the revocation or suspension of the license, surance company already licensed as such needs ense to act insurance agent. (White Gold Marine Services, Inc. vs. Pioneer Insurance and Surety Corporation, 464 SCRA 498 [2005}.) (3) Noinsurance company doing business in the Philippines, or any agent thereof, shall pay to any person licensed to act as insurance agent, variable ict agent or general agent, nor shall such person receive, any commission or other compensation for the insurance on his life or property, or other interests appertaining thereto, unless such person has secured for or placed with the same company at least an equal amount of outside business during the period covered by his license. This rule also applies in the case of a partnership, association or- sae nsuranceCODEOFTHEPHILIPINES ANNOTATED Sea ap, ost corporation licensed to agent or general agent onthe fie or propery, o such partnership, ot See nembes ‘or stockholders. E (4) No person shall be licensed to act as an insurance ageny cor general agent of more than or ance comy as general agent of more thar on int pai aa of more than seven other non-life insurance companies vrgad as an insurance agent or general agent shall its an insurance broker, nor shall a person licensed as an insurance broker be licensed as an insurance agent or vent in the same kind of business. The same limitation the individual named in the license issued to a part agent, general or insurance broker. , shall be licensed to act as general agent No person, ho! sed as an ordinary agent and actively engaged as such for at No official or employee of an insurance brokerage or an adjustment company and no individual adjuster shall be licensed toact as its insurance agent or general agent. (6) No application for license of an employee with the rank of manager and above, of an insurance company to act as its insurance agent or general agent shall be entertained unless itis accompanied by a board resolution authorizing said employee to act as such. (Ins. Memo, Cir. No, 3-93, June 28, 1993, as amended Ins, Memo. Cir. No. 2-94, July 15, 1994.) The Insurance Code governs the licensing requirements and other particular duties of insurance agents but it does not for the application of the Labor Code with regard to labor standards and labor relations. (Great Pacific Life Assur. Corp. vs. National Labor Relations Commission, 187 SCRA 694 [1990].) Application for license, ion for the issuance I of a license toa) thea or renewal of a ct as insurance agent or general agent shall be upon forms Pare EE eee eee eee rere eet AGENCIES AND TECHNICAL SERVICES: “Insurance Agents and Insurance Brokers prescribed by the Insurance Commissioner. For a partnership, ion or corporation, the application shall designate the individual who is to exercise the power granted by the icense. Such application shall be accompanied by a copy of the applicant’sincome tax return for the preceding year and privilege tax s for the current year if applying for renewal of license. (2) The application for the issuance of a general agent's license shall, in addition, be accompanied by a copy of the general agency agreement entered into by and een the applicant and the insurance company concerned, limiting the power of the agent to solicitation of insurance business only, together with a copy of the power of attorney duly executed by the insurance company empowering the appli notices, summonses, and legal processes for and in behalf of the said company in connection with actions or legal proceedings against such company. (3) In order to facilitate the processing of applications for renewal of insurance agent's licenses, particularly with respect to the income earned by the applicant concerned, it shall be considered sufficient compliance with the “actively engaged” requirement (infra. if itis certified under oath by the president or the executive /senior vice president (if there be more than one vice-president) or the vice president (if there be only one vice-president) of the insurance company which such applicant represents that he has examined the income tax return of the said applicant for the preceding year and found that the amount of commission or other compensation which the latter has received for services rendered as insurance agent of said company for the year amounted to at least P3,600. (4) The said certification shall be accompanied by a statement of waiver, jointly signed by the insurance company and the insurance agent concerned, to the effect that if the aforementioned certification be found to be false in any respect, the license so renewed in consideration of such certification “fective February 15,2006, the Commission stated an electronic way of processing, ew and renewal of ile insurance agents application fr license,JHILIPPINES ANNOTATED Secy, py cove OFTHE! Io 25 THEINSURANCE: ancelled without prior notice. The parg - the manner calleg shall be en then be dealt w’ responsible theref for in the premises. i f the insurance ten applicant for renewal of agent's we Aa been licensed as such by the Insurance license fan ymber 30, continualh Commission before Pi nit proof that he has submitted thy, been so licensed Section 2 Rule IV ofthe Implementing Rules ‘ct No, 5455, to the Board of Investments, ae agent's | insurance agent's or general agent's license fo Hite vances denied renewal on the ground that he has not been actively engaged as such agent or general agent as provided ‘above, such agent or general agent may, upon submission of ‘a swom certification executed by a responsible officer of the insurance company concerned that such agent has to his credit business to which he is entitled to renewal commissions, be issued a special license to service existing policies solicited by hhim and receive renewal commissions therefor. But in no case shall he solicit new business under said license, nor shall such license be renewed annually for more than five (5) years. (7) An insurance agent or general agent who, for not having been actively engaged as such, failed to qualify for renewal of his license during the period prescribed for such renewal may, after one year following the expiration of said license, apply for the issuance of a new license upon showing that such applicant has undergone training in the kind or kinds of business contemplated in the license applied for in the company he desires to represent for at least 40 hours during the last six months prior to his application. (Ins. Memo. Cir. No. 3-93, supra.) An insurance or reinsurance broker, whether single Proprietorship, partnership or corporation is considered in a service-oriented business subject to value-added tax (VAT) Pursuant to Section 102(a) of the National Internal Revenue ‘Code. Both brokers are required. by the Insurance Commission to Po the VAT before their licenses as such may be renewed by the mmission, (Ins. Ci ter No, 3-90 CL, Feb. 19, 1990.) Sec.301 SALES AGENCIES AND TEC Tile 1 — Insurance Agents and SEC. 311. Every applicant for an insurance broker's license shall fle with the application and shall thereafter in force while so licensed, the people of the Republic of the Philippi by a company authorized to become surety upon official stipulations, bonds and_undertaki be in such amount as may be fixed by the Commissioner, but in no case less than Five hundred thousand pesos (P500,000.00), and shall be conditioned upon full accounting and due paymentto the thereto of funds coming Into the broker’s possession force until released by 1d by the surety. Without prejudi the applicant against any claim or claims for b i broker which may be made error or omission, whenever Jed to have been committed, int oF any person who has been, is now, or may hereafter during the subsistence of the 15 be employed by the said applicant in his capacity indred thousand pesos (P500,000. Surety bond required of insurance brokers. or ‘The applicant for an insurance broker's license must file wit the application a bond in the amount of P500,000 in favor of t"INES ANNOTATED ‘es THEINGURANCE CODEOF THE PHITIPP — ie of the Republic of the Philippines execu People cae surety upon official Senin ay ipulations, cor undertakings under io. 536, sreied by ae ee 7006, which bond shall be maintained jy force while so licensed. Aa 1d shall be conditioned upon full accounting a rare sesntitled thereto of funds coming in, the broker's possession through insurance transactions under license. (Ins. Memo. Cir. No. 2-85, Aug. 7, 1985.) ‘The bond is intended primarily for the protection of the vxinst non-delivery to the insurance company of the premiums paid. Such bond is not necessary in the use of an Insurance agent, for payment to him is payment to his principal — the insurance company’ ddue payment tothe per insured age Errors and omissions insurance policy required of insurance brokers. Upon approval of the application, but before the if an insurance broker's or reinsurance brok« issued separately by two (2) insurance companies authorized to do business in the Philippines, satisfactory to the Insurance Commissioner. (1) Purpose. — The policies shall indemnify the applicant against any claim or claims for breach of duty as insurance broker or reinsurance broker, as the case may be, which may be available against such applicant by reason of any negligent act, error or omission, whenever or wherever committed of alleged to have been committed on the part of said applicant or any person who has been, is now, ot may thereafter during the subsistence of the policies, be employed by the said applicant in the conduct deren Mee Gi No, 2426, pests the caption requiem The Clear spelates the cree ne brokers and new entrant fective uly 1,206 $31,206, 2007290, end 2010, dle of compliance on or before Decembet Secs, 312313 of any business conducted by or on behalf of the applicant in his capacity as insurance broker or reinsurance broker, as the case may be. (2) Total limit of lability. — The total limit of liability of the said two (2) policies shall be equivalent to 100% of the broker's insurance-related income (commissions and/or fees) for the preceding fiscal year, but not exceeding a maximum of P10 million (subject to periodic review should there be changes in the market conditions), or in the event that no insurance company icy by such limit of liability, the deficiency in amount shall be satisfied by the applicant by depositing such kinds of government securities specified in Section 203 of the Insurance Code with, and satisfactory to, the Insurance ‘Commissioner, free from any lien or encumbrance, equivalent to said deficiency, likewise to answer subsidiarily for the applicant's liability arising from its brokering business. jes, in no case the errors and omissions pol shall d (Ins. Memo. SEC. 312. The Com determine the competence 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. The Commissioner may delegate or authorize the administration of the examination to an independent organization, subject to such conditions that the Commissioner may provid SEC. 313. An applicant for the written examination mentioned in the preceding section must be of good moral character and must not have been convicted of any crime involving moral turpitude. He must satisfactorily show to the Commissioner that in the kind of insurance contempk ‘examination may be of the Commissioner extensive education an F training in insurance.PHILIPPINES ANNOTATED Secs. 312 iE 0 THEINSURANCE CODEOF TH Qualifications for insurance agent's icense. (1) To qualify for a general agent, the appl : (a) be a resident of the Philippines; (b) be trustworthy; and (©) pass the written examination prescribed, if nop ‘otherwise exempt from taking the same. (Q) In case the applicant is a partnership, association op corporation, such applicant must be domiciled in the Philippines land empowered under its articles of incorporation to transact the kind of business applied for. The individual to be named in the license applied for must possess the above qualifications. (Ins, Memo. Cir. No. 3-98, supra.) ne t0 act as an insurance agent gy Qualifications for insurance or reinsurance ‘An applicant for a broker's license must have the following qualifications: (1) He must bea \0 citizen. However, an alien who has been licensed and doing business as such broker on August 8, 1985 (date of effectivity of Ins. Memo. Cir. No. 2-85, supra.) may be allowed to continue as such broker, provided that he has a permanent resident status; (2) He must have at least ten (10) years experience as: den ants and/or underwriting, executive (at least lepartment manager level) in an insurance brokerage firm or insurance company, or (©) a general agent. The above requirement may applicant holds at least an a Institute of Asia and the Paci Institute (CU) or ‘a the Commissioner; and be reduced to five years if the ssociateship from the Insurance ic (HAP), the Chartered Insurance educational institution acceptable 10 Pee et ‘Secs 312313 SALES AGENCIES AND TECHNICAL SERVICES ot “ile 1 — Insurance Agents and Insurance Brokers (3) He must have had no history of unprofessional conduct known to the Insurance Commissioner, other brokers and Ins. Memo. Cir, No. 2-85, supra.) a permanent resident status. Abroker which is a stock corporation may be issued separate ance and reinsurance broker, provided that the its insurance and reinsurance brokering operations. A license issued to any person, partnership, association or corporation to act as insurance or reinsurance broker shall authorize only the i or attempted exercise of such authority by an individual not so named in the license, with the knowledge or consent of the licensee shall constitute cause for the revocation or suspension of the license. (bid.) and/or reinsurance brokers shall include among their primary purposes the purpose to act as such. The descriptive word “insurance broker” or “reinsurance broker” must also be included in the business /corporate name in order to properly represent the company’s operation. (Ins. Cir. Letter No. 12-06, March 5, 2006.) Qualifications for authorization of life Insurance agents to sell or offer for sale a variable contract, or in the sale, negotiation, making or consummating of any variable contract unless such person shall have a valid and current license from the Commission authorizing such person to act as a variable contract agent. No license shall be issued unless and until such person shall show2 am nsupancECODEOFTHEPHILIPAINES ANNOTATED. Sez to the satisfaction of the Commission that he has satisfied the following qualificat (1) He has been dul for atleast three years: (2) He has satisfactorily completed a training program on variable contracts; and ination prescribed by {@) He has passed the written examinal bythe Commission for such purpose, unless exempted from taking the Sane funder Item 47 of Ins. Memo. Cir. No. 2-81, Dec. 17, 1981) (ins. Memo. Cir, May 21, 1985; see Note 3.) Qualifications for authorization of life insurance ‘companies to issue, deliver, sell or use variable contracts. ‘Any life insurance company authorized to transact business in the Philippines requesting authority to issue, deliver, sell oruse variable contracts mustshow to the satisfaction of the Commission that it has satisfied, in addition to the requirements of the Code relative to variable contracts, the following qualifications: (1) The company, during each of any three including the Iast two (2) ofthe five (6) fiscal years next preceding the date of authorization to issue, deliver, sell or use variable contracts, shall not have experienced a net loss from operations; icensed to act as a life insurance agent (2) The company, during each of any three including the last two (2) of the five (5) fiscal years next preceding the date of authorization shall have maintained surplus accounts in excess of minimum margin of solvency required of not less than (3) The company shall initial ly transfer and allocate to the designated separate variable contract account in cash or other acceptable investment or a combination of both, an amount equal to at least PI " au Joa est F'.000000 from the unassigned surplus ofthe (4) The company sh: i y shal atall ti separate variable contract account a serbia excess of the value of the admit the designated int a surplus which shall be an ted assets of such account over eG — —_=<=S AGENCIES AND TECHNICAL SERVICES cd “—Trsurance Agents and Insurance Brokers Secs 312313, ies and reserves of at least two (2) per mille of the total cts as of the preceding year, or 10% of the total value of the admitted assets in the variable contract account as of the preceding year, whichever is greater. The surplus shall in no event be less than P1,000,000; and provided, further, that in the determination of the margin of solvency requirements of the company, the total amount of its insurance in force stated under Section 200 of the Insurance Code shall be deemed to exclude the insurance in force on the variable contracts. (Ins. Memo. Cir. No. 1-85, July 18, 1985.) Examination required of applicant. (1) The applicant for license shall qualify himself i written examination for the kind of license applied for, if not otherwise exempt from taking the same. The applicant for such examination must be of good moral character and must not have been convicted of any crime involving moral turpitude. He must satisfactorily show that he has been trained in the kind or kinds of insurance contemplated in the license applied for. A grade of 70% shall be necessary to pass the examination. (2) No such examination shall be required of the following: (a) One who presently holds, or previously held at anytime during the last 10 years, a license (excluding a temporary certificate of authority) of the kind applied for; (b) One who has successfully completed the Insurance ‘Agents’ Course conducted by the Insurance Institute for ‘Asia and the Pacific or an academic course and/or training program, satisfactory — to the Insurance Commissioner, in the kind or kinds of insurance contemplated in the license applied for; and (0) One who, because of his previous conn any insurance company, ot with any office or firm insurance matters, is found by the Insurance Commissioner to be trustworthy and competent to transact the business contemplated in the license applied for. (Ins. Memo. Cir. No. 3-93, supra.)PINES ANNOTATED et. THEINSURANCE CODE OF THEPHILIPTIN ae Issuance of limited license. oe increase the number of Filipinos with jj ae natoriy to act as such even without passing the requizeg ance agents examination, provided tl ‘personal accident insurance policies o ‘Oct. 13, 1997.) The Insurance ‘Commission n« Nn vse for agents of personal accident policies. Those anal to sell or solicit such policies shall have to apply for nse to sell them, However, agents who were already issued license for personal accident may continue to possess the license and are allowed to renew their licenses. (2) Existing limited licen: insurance (under CLNo. 12-99) s the date of their expiry. Those intending to ‘motor insurance shall have to pass the q ion to qualify for su (c) Has obtained {fraud or misreprosentati 's misappropriated or converted to his own ally wi capaci oneld Moneys required to be held in a Hi . a, tence te ta demonstrated trustworthiness and or msurance broke 3 eusine88 a8 an insurance agent Ciel ich manner as to safeguard the Hae eee eee eee ee eee eee eee ‘Secs 315316 SALES AGENCIES AND TECHNICAL SERVICES Tile 1— Insurance Agents and Insurance Brokers (g) Has materially misrepresented the terms and conditions of policies or contracts of insurance which he ‘seeks to sell or has sold; or (h) Has failed to pass the written examination pros- cribed, if not otherwise exompt from taking the same. In addition to the foregoing causes, no Ii as insurance agent or insurance broker sl thereof has not been actively engaged as ‘such agent or broker in accordance with such rules as the ‘Commissioner may prescribe. bility through the issuance of policies or contracts of nce, shall be held by the agent or broker in a 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 ori broker a policy or contract of insurance 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 fiduciar ities, the Insurance Commissioner SEC. 316. Any provision of existing laws to the contrary notwithstandit shall, within the Philippines, sell or offer for sale a variable contract or do or perform any act or thing in the sale, negotiation, making [Rssuzance Company v=, hua 309 SCRA 250 (199) as, the best evidence of such authority isthe fact tha the petitioner ayment. I is, a6 vere ae erat agents acknowledgment of receipt of Payment." (American Home696 THE INSURANCE CODE OF TH! contract other than for ‘or consummating of any vari himself unless such person S! xct agent. No such license shall be rnd until the commissioner is satisfied, after ‘nation that such person is by training, knowledge, vate character qualified to act as such agent. Any ieense may be withdrawn and can by the Commissioner after notice and hearing, if he shall find that the holder thereof does not then have the qualifications required for the issuance of such license. 1 be unlawful for any person, company ‘the Philippines to act as general agont of any insurance company unless he is empowered by a written power of attorney duly executed by such insurance ‘and registered with the Commissioner to receive immons and legal processes for and in behalf agent of the company concerned or to the Commissioner shall be sufficient Servico and deemed as served on the insurance company olf? SEC. 318. Except as otherwise provided by law or treaty, it shall be unlawful for any persc association panies not authorized 8, covering risks, ippines; and any corporation vi be deemed gui , associ the provisions of this secti company sce Section 196, {EPHILIPPINES ANNOTATED Seo 37, 217355 ere CES secs.314316 SALES AGENCIES AND TECHNICAL SERVICE ‘Tile 1 Insurance Agents and Insurance Brokers thousand pesos (P250,000. months, or both at the discretion of the ‘That the provisions of this section s! reinsurance. (a) 1e cour hall not apply to Denial, suspension, or revocation of license. ‘The grounds are enumerated in Section 314. An application for the issuance or rene a license to act as an insurance agent or general agent shall likewise be refused if the applicant hhas been declared insolvent or bankrupt, or being a previous holder of a license, has not been actively engaged as such agent. {A license to act as insurance agent or general agent may likewise be revoked upon the termination of the agency contract, in which event the insurance company concerned shall give immediate notice in writing to the Insurance Commissioner, (Ins. ‘Memo. Cir, No. 3-93, supra.) ly engaged” requirement. The term “actively engaged” means that the license holder ave earned, during the year following the issuance of the jon or other compensation for services rendered such insurance agent, variable contract agent, general agent, insurance broker or reinsurance broker amounting to at least 3,600. In case the license holder is a partnership, association poration, the term “actively engaged” applies to the individual named in the license. (3) Except where the applicant has undergone the required training (No. 7, supra.), an application for the issuance of a license to act as an insurance agent, variable contract agent, general "Te ees forthe issuance or renewal area ste nsuRANCE COOE OFTHE PHILAPINES ANNOTATED Secs. 315.316 insurance broker shall likewise be provious holder ofa license ofthe without having been reneveq been actively engaged as such ty of his last license. (Ibid,) agent, insurance broker 0 re refused if the applicant, being 2 kind applied for, which & during the current yeat, has agent or broker during the effec —000— TITLE 2 REINSURANCE BROKERS ‘SEC. 319, Except as provided in the next succeeding no person shall act a8 roinaurance broker in the unless he is Prsippines un authorized as such by the or placing risks of effecting reinsurance, for company authorized to do business in the Philippines. ‘SEC. 320. Upon application and payment of the corresponding fee hereinafter prescribed, person may, if found qualified, reinsurance broker by the Commissia shall be valid after December 31 of (professional liability or 1s mentioned above shall indemnify the applicant against any claim or claims for breach of duty as reinsurance broker which may be jinst him by reason of any negligent act, error , whenever oF wherever committed or alleged to have been committed, on the part of the applicant ‘or any person who has been, is now, or may hereafter during the subsistence of the policies be employed by the said applicant in his capacity as reinsurance broker: ‘the filing of any claim or claims under one ing of the said claim aid policies shall or claims under the other poll «IIPPINES ANNOTATED Sex. 31833 cope oF THEPHt 70) THEINSURANCE! ely by two (2) insurance companies be nau Eppes tlie and hall be authorized to do bes be prescribed by the Insurance in such amounts 95 77 upon the size oF amount ofthe or erine applicant, but in no case shall the mess icies be less than Five hundred ner may recall, suspend or for violation ny provision of this Code after due notice and hearing. Reinsurance brokers. ‘Areinsurance broker' isan intermediary between a company that desiresreinsurance and a receptive reinsurer. For this service, the broker receives a commission from the reinsurer recouped from the rate charged to the primary writer (insurer). ‘Such brokers are useful because: They are able to suggest favorable facilities to primary (2) They can furnish: financial condition of rei mation on the policies, capacity, and ers, especially foreign companies; (3) They prevent embarrassment to the ceding company if the proposition proves unacceptable to the reinsurers (4) They secure reciprocators for reciprocal agreements; and (5) They secure uniformity whe ici vpailng coms ity where there are several partici Such services are parti ee Particular Secs.319321 SALES AGENCIES AND TECHNICAL SERVICES te) Tie2~ Reinsurance Brokers, primary writers. For the reinsurance company, the broker is primarily a “producer” of business, receiving his compensation from the reinsurer, although in other respects, he represents the primary writer (Riegel, Miller & Wiliams, Jz, op. cit, p. 127.) ~000—TITLE 3 RESIDENT AGENTS . 322, No person shall act as resident agent, as hercinstier defined, unless he fs registered 25 such with the Commissioner. ‘SEC, 323, The term “resident agent,” as used in this in its behalf notices, summons and legal connection with actions or other legal procee such foreign insurer or broker. accompanied with: a copy of the power of attorney, notarized and authenticated by the Philippine Con: empowering the applicant to act as resident agent and to receive notices, summons and legal processes for and in behalf of such foreign insurer or broker in connection with any action or egal proceeding against such foreign insurer or broke ) }e the duty of such resident agent to Commissioner of any change of his SEC. 326. A cortiicate of roi 4 ‘ registration issued to a Tose shall expire onthe tyre day of Denes of third year following its issuance unless it is renewed. after due notice and hearing, icate of registration issued to tion of any existing law, rule or N of this Code. ma ‘Secs. 522326 SALES AGENCIES AND TECHNICAL SERVICES. 7 “Tide3 —Resdent Agents Principal duty of resident agent. As provided in Section 323, the duty of the resident agent is to receive in behalf ofa foreign insurer or broker not authorized to do business in the Philippines, notices, summonses and legal ‘processes in connection with actions or other legal proceedings against such foreign insurer or broker. (see Sec. Section 130 of the Corporation Code of the Pambansa Blg. 36.) provides the rules regarding the service of summons, processes and all legal notices on a foreign corporation when it is a party in a case pending in court. (see Sec. 191, pat. 2 of the Insurance Code.) Ithas been held that Section 14, Rule 17 of the Rules of Court (now Rule 14 under the Revised Rules of Court) on the manner ‘of acquiring jurisdiction over a foreign corporation, is applicable the foreign corporation, whether licensed or not, actually cts business in the Philippines. (Pacific Micronesian Line |) Under said section of the purpose, oF designated by law to that effect, or on any ofits officers or agentsTITLE 4 NON-LIFE COMPANY UNDERWRITER ‘SEC. 327. No person shall act, and no company employ any person, as non-life company under whose duty and respo ‘evaluate and accept risks and conditions, including those pertaining to amounts of retentions, under which such risks are to be accepted by the company, unless such underwriter is registered as such with the Commissioner. ‘each line of risks engaged in by such non- ‘company with such entries therein as are now or as may well maintained and kept, and that all entries ther properly and correctly record th registers shall ‘open to inspection and examination of representatives of the Commissioner at business hours. applicants desiring to act as unde ois hold for 74 See 7531 SAL Title 4—NorLife Company Underwriter ‘Such examination shall not be required of any person who has served as non-life company underwriter for 2 period of at least five (5) years, if the Commissioner is satisfied of the applicant's competence as shown by the results of his underwriting work in the nonvlife Insurance company or companies that employed him in that capacity. ‘The minimum underwriting experience herein required may be reduced or waived if it is shown to the satisfaction of the Commissioner that the non-life company underwriter hhas undergone extensive education andlor training in insurance. ‘SEC. 330. Any applicant who misrepresents or omits ‘any material fact in his application for registration 28 a registered as such nondife company underwriter and, if cancelled and favor shall be In the event that the certificate of authority of a non- life insurance company to transact business Is suspended or revoked due to business failure arising largely from the imprudent and injudicious acc of registration recalled by the Commissioner, and no similar certificate shall thereafter be issued in his favor. ner may, after due notice and hearing, id or cancel such certificate for violation of ws, rules and regulations or of any provision of Employment of non-life company underwriters. i smpany is required to employ (1) Every non-life insurance company is required c at lect one von life company underwriter, duly registered withseé THEINSURANCE CODEOF THEPHILIPPINES ANNOTATED Secs, 2745 for each line of risks, namely, fire, engaged in by such company, required to see to it agencies, and/or the Insurance Commission, f0 ‘marine, casualty and suretyship, i (2) Every such company is furthermore that each of its branches, extensions, gene! April 15, 1977; see Ins, Cir. No. 68, Nov. 2, 1966; Ins. Memo. Cir, ‘No. 1-90, March 2, 1990; see Secs. 327-328.) (3) No person registered with the Insurance Commission as non-life company underwriter shall be licensed as non-life insurance agent in view of the conflict of interest that will arise from the nature of the work of an underwriter and agent. The Certificate of Registration of a non-life company underwriter who is also licensed as insurance agent shall not be renewed unless the certificate of authority to act as agent is surrendered to the Commission for cancellation. (Ins. Memo. Cir. No. 3-91, Sept. 19, 1991.) Insurance underwriting, ‘The underwriters’ of a company are those who have the task of accepting, rejecting, or revising insurance contracts which the marketing system brings to the insurer. A general description of underwriting is simple; itis the selection and rating of risks which are offered to an insurer. (1) Selection. — It implies that there are some acceptances and some rejections or that not all risks will be mommpal for ‘nourance, Obviously, it would not be a sound business practice oa insurer {o write an insurance contract for every individual asks for protection against loss. Naturally, the insurer does Tae ro tie feng ewer apn et 9 Bes he meaning ae Somer ee msgn time raat maga sain nar nen whe agora entra Hckelhaupt op. cit, p. 140) Sec. 327-331 SALES AGENCIES AND TECHNICAL SERVICES ne ‘Tile 4—Non-Life Company Underwater not want bad risks, or those which seem to offer ahigh probabil of oss, On the other hand, even bad risks could be sccepted the price charged for the contract were high enough to pay for all losses and expenses and still permit the insurer a profit on the business. The purpose of underwriting is thus found to be the acquisition by the insurer of selected insureds who at least in the return a profit to stockholders (or policyholders of a mutual type insurer). ing or pricing. — The pricing of insurance contracts is underwriting which requires the services ‘insurance rates are calculated by actuaries infra.) who apply sound principles of mathematics to the particular pricing problems of insurance. The fundamental part of most insurance: is the estimate of future losses, (see D.L. Bickelhaupt, op. cit, pp. 140-147; see Sec. 358.) eanTITLE 5 ADJUSTERS person, partnership, association, or is an adjuster, as hereinafter defined, thorized so to act by virtue of a license issued or renewed by the Commissioner pursuant to the provisions, of this Code." (As amended by R.A. No. 10880) SEC. 333. An adjuster may be an independent adjuster ora public adjuster. ident adjuster” means any person, n oF corporation which, for money, jon or any other thing of value, acts for or on adjusting of claims arising under ies issued by such insurer. The term “public adjuster” means any person, or which advertises for or ter of such claims. adjuster; and no unless said adjuste Provided, however, Th: nsed as a public adjuster; na firm or person has been "Delete “Proie, and inthe case of pa itscapital mus be owned Secs. 335-399 SALES AGENCIES AND TECHNICAL SERVICES Tile — Adjusters licensed as a public adjuster, he shall not be another Heeneooe ncaa he shall not be granted ijuster and vice versa. | be required of any company acjuster who is a saaned employe of an insurance company for the adjustment of claims filed under policies issued by such insurance company. ‘SEC. 335. Such license or any renewal thereof may be Issued by the Commissioner upon written application filed ier, which shall contain such information as he may require, and upon payment of the corresponding fee hereinafter prescribed. ‘SEC, 336. The Commissioner shall conduct, at such times, and in such places as he may decide to hold, written jons to determine the competence and ability of applicants desiring to act as adjuster of insurance claims. ‘SEC. 337. No adjuster's license issued hereunder shall bbe valid after December 31 ofthe third year day following the issuance of such license unless it is renewed. SEC. 338. Nothing contained in this title shall apply nsed attoney-atlaw who acts or aids in adjusting ‘of his profession and who does not advertise himself as an adjuster. ssioner may suspend or revoke ter giving notice and hearing to juster cous ‘Commissioner finds that the the adjuster c said adjuster: Has violated any provision of this Code and of the ings and instructions of the Commissioner or ‘any law in the course of his dealings as an Has made amaterialmisstatementinthe application fh license; or Has been guilty of fraudulent or dishonest prac- (@) Has demonstrated his incompetence oF untrust- worthiness to act as adjuster; oF70 Adjustment of claims defined. contract or policy and th insured is entitled to recei {HE INSURANCE CODE OF THE PHILIPPINES ANNOTATED Secs. 3234 (e) Has made patently unjust valuation of loss; or (f) Has failed to make a report of the adj proposed within sixty (60) days from the date oft the claim by the insured with the insurer, 's0 to do by reasons beyond his control; {g) Has refused to allow an examination into his affairs ‘or method of doing business as hereinafter provided. SEC. 340. Every adjuster shall submit to the Commis- sioner a quarterly report ofall losses which are the subject, of adjustment effected by him during each month in the form prescribed by the Commis The report shall be filed within one (1) month after the end of each quarter, SEC. 341. Every adjuster shall keep his or its books, records, reports, accounts, and vouchers in such hether the said adjuster 18 of law or regulations ‘obligatory upon him or whether the method of doing business of the said adjuster has been fair, just and honest. SEC. 342. The Commissioner sI year and whenever he considers the pt ‘demands, cause an examination to be made ‘and method of doing business of every ‘SEC. 343, Any violation of any provision of this ti be pune by a fine of not less than Ten thousand peces {'0-000.0), of by imprisonment at the discretion of the Court: Provided, That, n case ofa partnership, association rp the said penalty shall be imposed upon the ‘anager, managing director, director its business or responsible for the violation, Secs. 332-M3__ SALES AGENCIES AND TECHNICALSERVICES ™m Title — Adjusters Kinds of adjusters. Adjusters fall into five (5) categories: (1) Agents as adjusters. — Agency involves a principal who authorizesa second party anagert tocreate, modify or terminate contractual relations between himself and a third party. To create an agency relationship, it is not necessary that the agreement be reduced in writing. However, in the business of insurance, agency contract or “commission of the parties and outlines the to act for the principal or insurer. ) (a) In property insurance. — Many agents have the authority of their companies to settle a claim immediately with the policyholder. For smaller and uncomplicated losses, expedient and efficient way to pay clai The agent is often involved yrwards the death notice and certfic is issued by the company for delivery to the policyholder’s beneficiary by the agent. Life insurers do not have the problem of determining the extent of loss paym« ‘common in property insurance losses. An excef : be the extra payments for accidental death, which requires 1d definition in some cases (Ibid, pp. (2) Staffor company adjusters’ — They are sal oF ere Company forthe adjustment of ies issued by such insurance company. "334, par. 2.) Some insurers use staff ‘while others are more apt to use the ers available (D.L. Bickelhaupt, op. — The term is defined by law. (see tersare experts who have made loss- ‘Some have specialized in particular fields. virers who request their services (Iid.) adjusting a busi They work for To called “suse” atessma. THEINGURANCE CODEOFTHE PHILIPPINES ANNOTATED Secs. 32943 separate corporations (4) Adjustment bureaus. — These at supported by many insurers that re ‘Theirsolebusinessis claim adjustment States, insurance companies formed bureaus or companies to do cooperatively what the individual companies would otherwise have to do. In 197 antitrust investigation by the Department of divested themselves of ownership in these bureaus (Riegel, Miller and Williams, J, op- cit, p. 113.); and ) Public adjusters. — The term is defined by law. (see Sec. 324.) As the name implies, public adjusters represent the public in contrast to the adjusters who represent insurers.’ They are Liability of a settling or claim agent under an insurance policy, In one case, the main issue is wheth« or claim agent of a disclosed principal ‘company — can be held jointly and sever Secs,392399 SALES AGENCIES AND TECHNICAL SERVICES 7 TileS— Adjusters principal tunder the latter’s marine cargo insurance policy, given agent is not a party tothe insurance contract. the agent does not onal liability. The recourse of the insured is to press his claim against the principal. Itis immaterial that only the agent is sued or both the agent and the principal are impleaded. The agent cannot be sued liable whether singly or solidarily with the prin ith Bell & Co,, Inc. vs. Court of ig Salonga vs. Wamer, Barnes ‘ode, contracts are binding their assigns and heirs) who execute 207 of the Civil Code clearly provides that only when the obligation expressly so ‘when the law or the nature of the obligation requires Section 190 of the Insurance Code is quite clear as to the purpose and role of a resident agent. Such agent, as a representative ofthe foreign insurance company, is tasked only to receive legal processes on behalf of its principal and not to for any insurance claims. (Ibid.) Jing a mere agent and representative, such agent not the real party-irvinterest. If the party sued is not the party, any decision that may be rendered against him Proud te futile for the decision cannot be enforced or executed. (Ibid; sce Rules of Court, Rule 3, Sec. 2.) Services of adjusters. ‘They may be enumerated as follows: ing of promptaid and advice following a loss, for asually arrives very promptly after the loss;sit. THBINSURANCECODE OFTHE PHILIPPINES ANNOTATED Sex, (2) aids in preventing further damage; {@) examination of policies and explanation of contract tenn to the insured; (#) aid insecuring promptness of settlement by supplying thy formation and assistance of repairs, replacements, engineer service, salvage, and the like; ‘gineering sand (6) appraisal of val (6) assistance in making inventories, securing expe opinions, and preparing necessary documents. Satisfactory service by agents and brokers of course, promotes satisfactory adjustments. ( Williams, Jr, op. cit., p. 170.) Report of claimiloss adjustment to insurance company. ‘Thefollowingare the regulationsofthe Insurance Commission ‘on this matter: (1) No report of adjustment on any insurance loss claim shall be submitted by an independent adjuster or a “company” or “in-house” adjuster, and no insurance company concerned full eceive, acknowledge, and/or accept such report, unles same is under oath, duly subscribed and sworn to before notary public or any public officer authori in Cnty earning ese et sm (2) No fee acter concern a 25 the ca8e may be, shall be pai tothe * Services rendered in the adjustment of insurance losses or claims unless the corresponding ‘jal report of filing of claim by in submitted within 60 days from date concerned, except eeAa insured with the insurance company the adjuster’s eet PP=¥ented 50 to do for reasons eyo! 222543 ct Ses SALES AGENCIES AND TECHNICAL SERVICES. o “Tile 5— Adjusters : ©) Faire of the company concemed to receive such adjustment report within 60 days as specified above from the adjuster assigned cannot be a valid reason for it to withhold payment or settlement of the loss or claim. (Ins. Memo. Cir. No. patil ‘or claim, (Ins. Memo. Cir. No. Report of claim/loss adjustment to Insurance Commission. das required under Section 331. Q) To f the implementation of the provisio Paragraph (b), No. 6, Section 13 of Pres. Decree No. 1185, otherwise known as the “Fire Code of the Philippines,” to the effect that: “Sec. 3. Appropriation and Sources of Income, x x x “bo partially provide forthe funding of the Fire Service the following x xx fees which shall acerue to the general fund of the National Government are hereby imposed: x x x (6) Twopercentum (2%6)of the service fees received from fire, earthquake, and explosion hazard pre-insurance survey and post loss service of insurance adjustment companies doing business in the Philippines directly through agents,” XxX every independent adjuster must icate in their quarterly reports required to be submitted to the Insurance Commission the amount of the adjustment fee charged against the insurer for insurance company concerned for the adjustment services of claims and/or losses of fire insurance and 6 covers Sllied thereto as contemplated under the provision of Section 167, of the Insurance Code, rendered during oc quarter covered upon which the two per centum (27) fee chargeable under the above quoted Code shall be computed and collected. 4-78, Nov. 10, 1978.)se THEINSURANCECODEOF THEPHILIPPINES ANNOTATED Se, Licensing of adjusters. shi niga — A person, partnership, association connon ey apy ene an adjuster. Inthe ey a natural person he must be a Filipino citizen and in the case of ip, association or corporation, atleast 607 of its capi partnership, Pia must be owned by citizens of the Philippines. (Sec. 323.) (a) Natural person, —In addition: 1) The applicant must be of good moral character and must not have been convicted of a crime involving moral turpitude nor have been convicted of any offense by final judgment; have at least 10 years experience in the 4 ent being applied for with any adjustment firm or insurance company or must have successfully completed the insurance adjuster’s course conducted by the Insurance Institute for Asia and the Pacific and/or a program satisfactory tothe Insurance Commission inthe line of business being applied for or passed tt ‘examination given by the Insurance Com! 3) Hemusthavea paid-up capi (©) Juridical person. — In addition: 1) The President, General : t Manager or Chief in ee 1B oc i tha applicant shall be of good moral involving morel ta ve been convicted of a crime itude nor have been convicted of idgment; and Secs 33265 SALES AGENC TECHNICAL SERVICES, m7 Tile 5 — Adjuster 3). Applicant must have at least a paid-up capital of 500,000. (€) Common requirements. — They are as follows: 1). Submission ofa three-year business plan; 2) That the application of an adjuster may be referred to the Association of Philippine Adjustment Companies and Insurance and Surety Association of the Philippines for comment as to applicant’s moral integrity, honesty 3) A pre-licensing examination of applicant's office premises and books of accounts and bank deposit/s shall bbe conducted by the Insurance Commission to determine if applicant is ready to do business as an adjuster. (2) Renewal of adjuster’ license. — The requirements are as follows: (a) Information sheet shall be submitted yearly with renewal application for license showing the updated lists of owners, partners and/or stockholders and their corresponding shares of stockholdings. Further, the information sheet should contain the names of current directors and officers of the corporation. No license to act as an adjuster shall be renewed if the holder thereof has not been actively engaged as such in accordance with such rules as the Commissioner may prescribe. ‘The term “actively engaged” should be taken to mean that the license holder shall have earned, during the year following the issuance of the license, adjustment fees for services rendered as such adjuster amounting to at least corporation and P250,000 if a sole provided that they have the fo[ESANNOTATED Secs 332043 sis THEINSURANCECOOE OF THEPHILPPIN id mi £ good moral character and must aarrve poen convicted of any offense by final judgment, reat least five (5) years experience i sace company or must have adjustment fim eed the insurance adjustr’s course saecaated bythe Insurance Inttute for Asia and the Pacific and /or program satisfactory tothe Insurance Commission in the line of business being applied for or passed the adjuster’s examination given by the Insurance Commission. (Ins. Memo, Cir. No. 4-93, suprt) (a) Applicant mt Establishment of branch or regional offices. establishing a branch or regi independent, must gi the Insurance Commission. In addition to the duly licensed and registered adjuster in the Home Office, such branch or regional office must have a qualified adjuster duly licensed by and registered with this ‘Commission on each of the fre, marine, casualty, and /or surety line of insurance loss adjustment which the branch or regional office intends to engage in. (Ibid) Prohibited acts. (2) Any adjuster, independent and/or company (in- found by the Insurance Commissioner to "ave eter received, exacted, and/or demanded money or other form of consideration directly or indirectly from an insurance claimant us and favorable recommendation of the and/or recommending pay ‘aim ian amount whichis either excesve or unscrooroly moog sa result ofthe failure of claimant to satisfy such consideration ‘Secs. 3823383 SALES AGENCIES AND TECHNICAL SERVICES 2 Tile 5 — Adjusters 0 demanded or being exacted by the adjuster shall be deemed to have ‘committed a fraudulent or dishonest. ‘act, demonstrating his untrustworthiness, thus reflecting adversely against his practices and methods of doing business as such adjuster. An independent adjuster found to have committed such prohibited acts shall no longer be qual from the employ of the insurance company. (3) No adjuster, independent and/or company (i shall be authorized, delegated, or entrusted the duty to checks or cash to the claimants in settlement of insurance claims serviced by such adjuster. Ibid.) (4) No adjustment company shall have any equity in an insurance company or vice versa. (Ibid.) —000—TITLE 6 ACTUARIES SEC. 344. insurance company shall be licensed to do business in the Philippi Insurance company doing allowed to continue doing such business unless they shall engage the services of an actuary ited wit directly responsible forthe direct actuarial work connected with 0 the business ofthe insurance company. The Commissioner ‘may also require non-life insuran the services of an accredited the rules. and regulations th formulate. (a) ‘SEC. 345, Any person may be the Commissioner to actas an actuary company or in any mutual benefit associ to do business in the Philippines upon application therefor responding fee hereinafter no seo M6 SALES AGENCIES AND TECHNICAL SERVICES — Actuaries The registration of the actuary shall be suspended or evoked by the Commissioner on the following grounds: (1) Failure to adequately perform required func tions and duties under this Code; (2) Failure to disclose conflict of interest; (3) Failure to comply withthe Code of Conduct of the Actuarial Society ofthe Philippines; or (4) Such other grounds that may be determined by the Commissioner. No actuary engat by a life insurance company shall board, chief executive officer or chief financial officer of the company or hold any position that the Cor ‘may determine to have an inherent conflict of interest to the position of an actuary (n) No certificate of registr shall be valid after December its issuance unless itis renewer 1ed under this title third year following SEC. 346, The following documents, which are from time to time submitted to the Commissioner by a life insurance company authorized to do business in the Philippines, shall be duly certified by an accredited actuary employed by such company: reserves, when reserves and non-forfeture values. {€) Policies of insurance under any plan submitted to joner as required by law. (0 Valuation of anuity funds or retirement plans. msaa THEINSURANCE CODEOFTHEPHILFTINES ANNOTATED Secs 344347 jire non-life insurance The Commision ma) re, simiar documents suomiy ceried by af accredited actuary y such company. (0) vance company suthorized to do business arevay employ any person who iS not ited under either of the qualifications for any ‘of actuarial work: Provided, That he shall not, at ary time, have the authority to certify tothe correctness of the foregoing documents. ‘SEC. 247, No accredited actuary shal serve more than ‘one client or employer at the same time. However, one Siready inthe employ of an insurance company may be allowed by the Commissioner to serve a mutual benefit association or any oer insurance company, provided the following conditions are first complied with: (@) That the request to engage his services by the ‘other employer is in writing; {b) That his present employer acquiesced to it in writing; and {c) That he furnishes the Commissioner with copies of said request and acquiescence. uditor shall be engaged by supervised persons orentitiesunlessithasbeenissuedanaccreditation certificate by the Commissioner. The accreditation certificate shall be valid until December 31 of the third {Year from issuance unless itis revoked or suspended. The ;ommissioner sI ules and regulations to govern the accreditation of the e tor and the revocation ‘or suspension of the accreditation. (n) Actuary defined. An actuary is an officer of a met cantile or insurance company ly respecting. such (1 Bouvier's He is one whose busi ; usiness sion insurance rks ane ents 6 Prfesion is to caeulate Secs H-M7_ SALES AGENCIES AND TECHNICAL SERVICES = Title 6— Actuaries Actuarial work in insurance. (1) In Ife insurance. — The rates of premium are fixed by a separate actuarial staff. With the aid of mortality tables and the accumulated experience of his own and other companies, the actuary diagnoses mortality trends, fixes rates of premium, devises formulas for distributing dividends, estimates the costs of policy provisions, and deals with all the mathematical problems of the business. (Riegel, Miller and Williams, J, op. cit, P. (2) In property and liability insurance. —The role ofthe actuary varies according to the line of insurance and whether the insurer uuses rating bureau rates or develops its own. ([bid., pp. 93-94, 239.) The mortality table. ‘The basic obligation of life insurers is to pay death benefits, so they must know the expected life span of an insured group. ‘The mortality table isthe instrument by which the probability of living or dying is measured. This isa table showing the probable death rate at each age, and by starting with a given number at a given age, it shows how many persons will probably die during each succeeding yeat. Life insuranceactuariesconstruct tablesshowing themortality experience of large groups of people. Applying the principles of probability and large numbers, they can predict closely the number of deaths and the time of their occurrence in any large group. The greater the accuracy of predictions, the greater the umber of cases under observation. Large numbers permit ‘variations from the average to cancel each other. The size of the {group isbuilt upby accumulating like cases over along period of time and as the groups are increased over time, the actual results tend to equal the expected results. (DL. Bickelhaupt, op. cit, p. 239.) —000—TITLE7 (G ORGANIZATION AND RATE RATIN( MAKING SEC. 348. Every organization which now exists or Which may hereafter be formed for the purpose of making rates to be used by more than rance company usiness in the Philippines ganization.” The term rally mean the E ting organization which now exists ‘or which may hereafter be formed shall be subject to the provisions of thi ‘SEC. 350. No rating organization brow Ww and fee or subscr ind is may nag 28 2 rating organization, license to such ri thorizing it to make rates for the kinds of organization ™ Secs. 351-352 SALES AGENCIES AND TECH Tile? — Rating Organization insurance or subdivisions thereof as may be specified in Spt acense. No license issued toa rating organization shal be valid after December 31 ofthe third year following rate-making operations until it shall from the Commissioner a license which he h organization is complying very rating organization ‘promptly of every change Constitution, its articles of agreement or association or its certificate of incorporation, and its A “member” means an insurer who par {is onttied to participate in the management organization. ‘A “subscriber” means an insurer which is furnished ing manuals by a rating ‘organization of which itis not a member. SEC. 351. Each rating organization shall furnish its ination to all of its members and subscribers, and ‘subject to reasonable rules {and regulations, permit any insurance company doing business in the Philippines, not admitted to membership, to become a subscriber to its rating services for any kind ‘of insurance or subdivisions thereof. Notice of proposed Shanges in such rules and regulations shall be given to Subscribers. The reasonableness of any rule or regulation inte application to subscribers, or the refusal of any rating organization to admit an insurance company as shall, at the request of any subscriber sr any such insurance company, bo reviewed by the Commissioner at a hearing held upon at least 10 days’ cortege to such rating organization and to such wrt gor or insurance company. The Commissioner supe efter such hearing issue an appropriate order. SEC. 352. No rating organization or any other asterition aall refuse to do business with, or prohibitINSURANCE CODEOF THEPHILIFPINES ANNOTATED Ses ms THER ment of commissions to, any person nected “wince broker pursuant to the provisions of Title 1 of this chapter. 4353, Rating organizations shall be subject to “a is eis enh Such examination expedient, pursuant to the provisions of this Code applicable to the examination of insurance companies. He shall cause such an examination of each rating organization to be made at least once in every five (8) years. extension thereof which he may grant. The Com ‘determine when a suspension of license shall Ch other services, and such services shall be available to all members and subscribers without discrimination. SEC. 256, An forthe examination of ples, aay reports, ingers ‘ena crises endorsements or oteriatunts fiabeatd or the ce thereof, and may make nable rules governing ibmission. Such rules shall contain pov ho event an insurance be confidential. (a) SEC. 357. Cooperat or among rating mato” among rating organizations making of in oer menersons, and insurers i is hereby authorized, promt the Scope of Sec. 358 SALES AGENCIES AND TECHNICAL SERVICES Tie 7 — Rating Organization and Rate Making this title which are applicable to fin 198 generally. The Commissioner may review such cooperative activities and practices and if he finds that any such activity or practice is unfair or unreasonable or in accordance with the following provisions: minimum, class, oF for all such risks. Any departure from such rates shall bo les, rating plans and rules filed Rates shall be reasonable and adequate for the class of risks to which they apply; () No rate shall discriminate unfairly between risks involving essentially the same hazards and expense elements or between risks in the application of ike charges and credits; {@) Consideration shall be given to the past and prospective loss experience, including the conflagration ‘nd eatastrophe hazards, if any, to all factors reasonably ‘tiributable to the class of risks, to a reasonable profit, to ‘Commissions paid during the most recent annual period ses. In case of I be given to the and to past and prospective other fire insurance rates, consideration experience of te fre insurance business during @ period St not less than five (6) years next preceding the year in which the review is mat may be grouped by classifications for Bstchment of rates and minimum Premios. i duce rates for sification rates may be modified to pros Tralvidual risks in accordance with rating plans which aris standards for measuring variations in hazards oF78 PPINES ANNOTATED Secs 355: r of THE PHILIPP' or THEINSURANCE CODE idards may measure sions, or both. Such stan experiference among risks that can be demonstrated to ny tole elect upon losses OF exDenseS. company which makes an or promulgate any rate or schedule be applied to any fire risk on the co amount of insurance on any risk specified part thereof shall be placed or subscribers to such rating organizat E statistical report showing premiums and losses on ‘expedient for the administration of the provisions of this title SEC. 361. Every nonife rating organization and 2e company doing business in the Commissioner, except as 9 insurance company may ‘Such filings for any kind roposes to use. An obligation to make SEC. 362. Every manual or rating plan fled as provided in a shall state or Clearly indicate the ct the coverage to which any such rane thereof will be applied, Secs. 363-365 SALES AGENCIES AND TECHN “ile 7— Rating Organization SEC. 363. The Commissioner shall review filings as. ‘s00n as reasonably possible after they have been made In order to determine whether they meet the requirements of this title. When a filing is not accompanied by the Information upon which the insurance company supports ‘such filing, and the Commissioner does not have sufficient information to determine whether such fi requirements of tis tile, he shall require suct ‘company to furnish the information upon which such filing, The information furnished in support of a filing may include: (2) The experience or judgment of the insurance ‘company of rating organization making the filing; (©) Its Interpretation of any statistical data it relles upon; (c) The experience of other insurance companies or rating organization; or (d) Any other relevant factors. ‘SEC. 364, If the Commissioner finds that any rate jm do not comply with the ey provide rates or rules ‘unfairly discriminatory or same withdrawn rating organizat Best sall nt alec any contractor poly made oF issued prior tothe expiration of such sixty (60}-day period. frdstanar mace and ron boha ore any poly contrat Suet at ge70 “THE INSURANCE CODE OF THE PHILIPPIN jed with and app’ t ‘a exoess of that provided by a filing ‘may be used on any specific risk, 1e Commissioner shall determine, | that the rates charged or filed on any class of discriminatory, inadequate or unreasona be appropriately adjusted. For the put provisions of this section, the Commissioner may from time to tim assifications of risks for any and prospective loss experience, i or catastrophe hazards, if any, to ‘and to a reasonable profit. ‘SEC. 368, Nothing contained in this title shall be construed as requiring any insurer to become a member of or subscriber to any rating organization. companies with respect to the equitable apportionment ar them of insurance which may be afforded to but are unable inary methods and Such insurance companies may agree among themselves. on the use of reasonable rates and modi SEC. 370, No insurance company doi any doing business in the Philippines or any agent thereof, no insurance broker, and no employee or other representative of any. such eases mpany, agent or broker, shall make, procure ate any contract of insurance or agreement a8 or indirectly, by giving ny manner whatsoever, low to the insured or to or sharing a commission ay or allow or offer to pay or a {ESANNOTATED Secs, 36.399 Seo. 371372 Sa Thc AGENCIES AND TECHNICAL SERVICES — Rating Organization and Rate Making any employee of such insured, either as an inducement fo the making of such insurance or ater such insurance hasbeen elected, any rebate fromthe pamium which ie le in the policy, or any special favor or advantage ividends oF other benefits to accrue thereon, oF shall lve or offer to iv any valuable consideration or ment of any directly or indirectly, which is not ‘specified in such policy or contract of insurance; nor shall any agent thereof, as to any policy nce issued, make any discrimination ny Filipino in the sense that he is given less advantageous rates, dividends or other policy conditions than are accorded to other nationals because advantages promised thereby, or any misleading estimate ‘or share of surplus to be received class of policies misrepresenting ‘nor shall any such company or agent thereof, or any other person, partnership or corporation ing representation or incomplete comp: ‘any person insured in such company inducing or tending to induce such person to lapse, forfeit, (or surrender his said insurance. ‘SEC. 372. Ifthe Commissioner, after notice and hearing, ‘any insurance company, rating organization, person has violated any of the Sha order the payment of fine ‘fo exceed Twenty-five thousand pesos (P25,000. not 1 ten ons, an shall imei suepend of Seamer pas = Cap eee med a separate offense. (a)sysupaNC CODE OFTHE PAILPPINES ANNOTATED Get tae 72 THEN Underwriters’. ‘associations and rating bureaus. the subject, voluntary associations Prieto any egisatin ers” “ating DATED,” or frequently organized by insurance id to secure we Wenience of the parties thereto, an in ey aie ‘business. Such combinations were generally TC yublic polis i eo a ay ob a moots charged for insurance upon the classes of property.! (Aetna Ins. Co. v. Commonwealth, 51 SW 62 However, if the purpose and effect of such associations is to eliminate competition as to the rates charged for, and the insurance, they would be invalid as a restraint of trade. (National Union Ins. Co. v. Dickinson, 194 SW 254; States v. South Eastern Underwriters Assn., 323 US 811.) (1) Necessity of regulation. — The of legislation conferring upon the state the power to regulate the rates charged by insurers is upheld on the ground that the insured has no bargaining power to protect himself against excessive rates. "The — te Pippin he rainy opanzion of none insurance companies the Philippir rance Rati iation (PIRA). It was. nt Teer kee a oa Seocarce wit cr rer orga imu comps nt RSD = icone hae aera sin see ste ‘ejand ol etn nt ie nara: de a iat ae igen isan hace a = Perri by a chairman. A violation oftarift rat ee eee Emer omc emerson ‘Seonsdered engaged in unfair competion, O™"PIRY that does not observe requiring every association ing of premium rates and policy Secs. B37 SALES AGEN “ALES AGENCIES AND TECIINICAL SERVICES 7 tng Organization and Rate Making ‘urance is not fixed over the counters of the companies Smith cals the higgling ofthe market, but formed underwriters, promulgated in schedules ing constancy which the applicant for owerless to oppose and which, therefore, has led uarance is of monopolistic lusory to speak ofa liberty of contract.” (EW. Patterson, p. 39, citi lance Ins SOUS, 307 Bagi es German Aiance Is Co, v. Geis (2) Extent ofregulation. — The power of astate to regulate and control the business of insurance includes the power to regulate insurance rates and to require the submission of documents to determine whether lawful rates are being charged. (a) With respect to rates, however, the Insurance Com- missioner has no power not conferred upon him by the express letter or reasonable construction of the statute. The right given the Commissioner to approve or disapprove rate schedules filed by insurance companies does not include the right to regulate the declaration of dividends, out of distributable earnings, to the policyholders. (43 Am. Jur. 2d, 123-124.) (b) The method of control over rates is to require full information about all rating organizations, to require every insurer subject to the law to file its rates either by itself or through a rating organization (see Secs. 351-353,), and to ‘empower the Insurance Commissioner to order a correction or adjustment of the rates charged (see Secs. 354-358), either ‘on his own initiative or on complaint from insureds or competitors. (E.W. Patterson, op. cit,, p40.) and liability insurance rates are subject to ee ife and el ‘insurance rates to much less yn. Two (2) major reasons for this difference in treatment are that property ar insurance rates (a) are often made by insurers pricing (legally) in concert, and (b) are more difficult to understand and to establish. (Riegel, ams, Jr, op. cit, p- 62.) restrictive regul4 apply and not unfairly the same , 358.) (a) Rates are considered reasonable and adequate when they produce sufficient revenue to pay al losses and expenses of doing business, and in addition, produce a reasonable haut, op. cit, p. 210; Riegel, Miller & 62.) (b) State-made insurance rates, if not confiscatory, are generally upheld. They will not be set aside merely because the aggregate collections are not sufficient to yield a reasonable profit or just compensation to certain companies that happen to engage in such business. (see 43 Am. Jur. 2d 125; Aetna Ins. Co. v. Hyde, 275 US. 440.) Ina case, the petitioner, fe insurance underwriter or agent was found to have induced private respondent to take a life insurance policy by promising him a rebate equivalent to 50% of the just annual premium payment, which would be taken out ‘of her commission on the policy. This promise was held covered ‘equally by Sections 361 and 363. (Lumibao vs. Intermediate Appellate Court, 189 SCRA 469 [1990].) ‘Combinations among insurance companies. The test asto whether a machination or a combi under the particular circ of the particular contract in /en agreement constitutes unlawful in restraint of trade is whether upon trade may be upheld welfare and not greater tha reasonable protection to the party (Ollendorf vs. Abrahamson, 38 such as merely regulates and pro ‘ motes c¢ ther itis such as may suppress oreven destroy oer eee Gann destroy competition. (Board of Secs 48-372 SALES AGENCIES AND TECHNICAL SERVICES 7 ‘Tide 7 — Rating Organization and Rate Making ‘Trade of Chicago v. US, 246 US 231, 62 L. ed. 683 [1918], cited in Filipinas Cia de Seguros vs. Mandanas, 17 SCRA 391 [1966].) Applying this test, the ‘Supreme Court held that Article 22 of the Constitution of the Philippine Rating Bureau (now, Philippine Insurance Rating Association) which provides that members of the Bureau “agree not to represent nor to effect reinsurance with, nor accept reinsurance from, any company, body, or underwriter licensed to do business in the Philippines not a member of good standing of this Bureau” is not unlawful, sonable or contrary to public policy, Its purpose is not to public. The limitati affect the public at all for whether there is reinsurance or not th liability of the insurer in favor ofthe insured is the same, What is, ‘more, whatever the Bureau may do in the matter of rate fixing is, not decisive insofar as the public is concerned, for no insurance company in the Philippines may charge a rate of premium that has not been approved by the Insurance Commissioner. It does not, therefore, constitute an illegal or undue restraint of trade. (Ibid)TITLE 8 PROVISION COMMON TO AGENTS, BROKERS AND ADJUSTERS ‘SEC. 373.Alicense issued to.a partnership, association or corporation to act as an insurance agent, general agent, jinsurance bro} ter shall full additional license fee as to each respective so named in such license in excess of one. Licenses and certificates of registratior the provisions of this Chapter may be ren of notices of intention on forms to be pres ‘Commissioner and payment of the fees the ‘SEC. 374, The Commissioner, in consult insurance ‘and promulgate a code of conduct insurance makes contact with the insurer re ofthe following: (1) Agent. — The auth ji : is delegated through anager te Mth the insurer operates : ae nndRemntt ad itty nuance, — He may tere make insurance effect bind a risk and thereby ly and prior to the actual fed agent, in which case, his 736 ite, nLES AGENCIES AND TECHNICALSERVICES ad '— Provision Common to Agent, Brokers and Adjusters Powers are restricted, and he must operate within the scope of the authority delegated to him. Incident limitations do not bind a third party and the agent may bind the principal if he is acting within the scope of his authority. (see D.L. Bickelhaupt, op. cit, pp. 116-117.) _(b) In life insurance. — The agent is merely a solicitor, with no power to bind the company. The company is is acts while he is acting within the scope implied authority, but because his authority is to the solicitation of business, the company right to accept or reject the risk he secures. | Miller & Williams, J, op. cit, p.97.) The life insurance agent is authorized to receive the first premium due on the application obtained by him, but not subsequent premiums. ‘An exception is the “industrial” life insurance agent who ly on behalf of one agent or broker; Broker, — Unlike the agent who legally represents surer, the broker acts on behalf of the insured. He is lependent contractor and is remunerated usually on a ‘commission basis. His principal function isto assist the applicant for insurance in placing risks. The broker has been termed an anomaly in that he serves the insured, yet is paid by the insurer; Service representative. — He is a specialist employed by surer on a salary basis to work with and assist agents in specialized lines. Company officers, managers, or general ts of insurance companies employed on a salary basis are luded in the category of service representatives. A license quired of a service representative. (see D.L Bickelhaupt, op. cit, pp. 118-120.) —000—TITLE 9 BANCASSURANCE ‘SEC. 375. The term bancassurance shall mean the presentation and sale to bank customers by an inst ‘company of its insurance products within the promi the head office of such bank dul Sentral ng Pilipinas or any of ns which the Commissioner and the Bangko Sentral ng Pilipinas may promulgate. To engage in bancassurance arrangement, a bank is not required ‘to have equity ownership of the insurance company. No insurance company shall enter into a bancassurance arrangement unless it possesses all the requirements as may be prescribed by the Commissioner and the Bangko Sentral ng Pilipinas. (n) No insurance product under this section, whether life oF nonsife, shall be issued or de previously approved by the Commissioner. (n) , SEC. 376. 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 ‘ules and regulations of this Act. (n) ‘SEC. 377. The Commissioner and the Bangko St E entral 'g Pilipinas shall promulgate rules. and regal effectively supervise the business of bancassura Bancassurance defined, ‘The term is defined in Sect in Section 375. It ofa financial product toa bank client inside ments for bancassurance, (1) The presentation and sale insurance products must b head office ofthe bank. = SO" Mi bank premises. Req f insurance company’s thin the premises of the Seon 575.37 739 (2) The bank must be duly licensed by the Bangko Sentral ng Pilipinas (BSP) under such rules and regulations promulgated by the Commissioner and the BSP; (3) The insurance company must possess ll the requirements prescribed by the Commissioner and the BSP before it can enter into a bancassurance arrangement; (4) The insurance product, whether life or non-life, to be issued or xd must be inthe form previously approved by the Commissioner; and (6) Personnel tasked to present and sell insurance products within the bank premises must be duly licensed by the Commissioner, and are subject to the rules and regulations promulgated by the Commissioner. ing Framework (Cir. No. 801, May 30, 2013.) applicable to all bank classifications, was approved by the Monetary Board of the BSP. It provides, among others: (1) Definition. — The following terms, as used in the Framework, are governed by the following definitions: (a) Cross-selting means the presentation and sale of @ financial product to a bank client inside bank premises 1 verbal communications. weratereferstoa group of entities whose inant activities consist of providing int services in a curtis, and insurance). A banking group, which inks related by common ownership and is engaged predominantly in banking, is subsumed within the context of a financial conglomerate. In the case of universal/ | banks, a financial product provider must have josed and reported as part of the group structure porn to Section 6 of Circular No. 749 dated February 27, 2012. (©) Fi create exposure to investment risks, 4 refers to products which do not ene Pach as eal lending orPHILIPPINES ANNOTATED Sec. 95, cove OFTHE 74 THEINSURANCE it cards, home mortgage loans, tea pro . ancl pret een ae ai cards) and of «Branca prod coeds authorized by the Monetary Board of the BSP. re Fnenie poduc provider means regulated fina (2 ich originates or produces the financial product ang catty wiihe risks associated with its issuance. The financal perteet provider should be incorporated and. domiciy Prothe Philippines including duly licensed foreign bang branches. (e) Bank premises refers to the premises ofthe head office and branches. wets Investment risk refer tothe risk, which is borne by the aan offss ‘of the principal amount (either full or partial) at ‘maturity or risk of not achieving targeted rate of retums, shall be The bank shall exercise due care and out cross-selling activities. This process shi financial products and financial product pro} shall put in place a formal written policy which should, at the very least, enable the bank to reach an assessment of the suitability of the financial product to be cross-sold. (3) Conditions on cross-sell ing. — To avoid any impression that products cross-sold within bank premises are guaranteed by the bank, the following shall be observed, at all times: 1g shall be the referral of bank clients to the Leslee presentat of financial product providers, Bank employees shall not assume any decision-making function, eg., in relation to ise, record-keeping and accounting, separate from the bank. credit worthiness, Like of financial products (b) There shall representatives who ‘Sec.375377 SALES AGENCIES AND TECHNICAL SERVICES. ae “Tide 9—Boreasurance employees. These representatives must have distinct designations to reflect their roles, (©) The presentation and sale of financial products shall ‘be conducted in an area within bank premises that is clearly Aistinguishable asa separate entity from the bank. (4) The bank shall manage the number of financial Product providers inside bank premises. The bank ensure that the number of financial product providers inside ‘bank premises do not constrict the normal flow of operations of the bank. =000—