In Re: Presidential Decree 612 and Republic Act 10607

Provisions concerning insurance in the Philippines were found in the Code of Commerce
and on the old Civil Code during the Spanish era. Then Act 2427 was enacted also known as the
Insurance Act, which expressly repealed he provisions on insurance embodied in the Code of
Commerce.
The Insurance Code of the Philippines was only instituted, promulgated and become
effective during the Marcos regime under Presidential Decree 612.
It was on June 11, 1978 when Presidential Decree 1460 took effect; it consolidated all
insurance law into a single code and was known as the Insurance Code of 1978. Amendments
were made by Presidential Decree 1014 and Batas Pambansa 874.
Last August 15, 2013 Republic Act 10607 was promulgated and was meant to revise the
Insurance Code of the Philippines. Noting that the revision was actually on Presidential Decree
612 and not 1460, for Presidential Decree 1460 basically reenacted Presidential Decree 612.
Republic Act 10607 introduced provision on new insurance products and developments
in the insurance industry; it also tackles the standards and thresholds under rules and regulations
implemented by regulators prior to its promulgation.

Here are some of the essential amendments made on Presidential decree 614 by Republic Act
10607:
1. It extends the period of validity of the license of insurers, insurance agents and insurance
brokers from one year to three years.
2. Transitory provision of Republic Act 10607 states that licenses that would have expired
by June 30, 2013 will be valid until December 31, 2015.
3. Section 444 of Republic Act 10607 grants persons affected by the amendments with a
period of one year from its effectiveness (from September 20,2013) to comply.
4. It increased amounts of the applicable net worth of a domestic insurer as of December 31
of 2016, 2019, and 2022 are provided under section 194 of Republic Act 10607.
5. Domestic insurer that is already operating at the time of the effectiveness of Republic
Act 10607 is required to have a net worth of P250 Million as of June 30, 2013.
6. Company that will engage solely in the reinsurance business hast to have capitalization of
at least P3 Billion paid in cash.
7. The unimpaired capital or assets and reserve of a Philippine branch of a foreign insurance
company also has to be at least P1 Million.
8. In PD 612, A new insurer established established under Philippine Law had to have a
paid-up capital of at least P5 Million. That requirement had been increased over the years
by the sec. of finance under the power granted to him by PD 612. Now, the minimum
paid-up capital required a new insurer company P9 Billion.
9. The power of the Secretary of Finance to increase the capital required for domestic
insurer has been retained.
10. The higher capitalization for insurers and a fixed term of six years for the Insurance
Commissioner.
11. The law likewise allows insurance firms to invest in more financial instruments.
Previously, they could only invest in virtually risk-free instruments, mainly government
securities.
12. It added provisions on new products like bancassurancethe partnership between a bank
and an insurance firm that allows sale of insurance products in the banks branchesand
micro-insurance activities.

















Contract Between insured and insurers is known as Insurance Contract.
There are two types of insurance contract:
A. Contract of Indemnity Except the life insurance contract, all other types of insurance
contracts are contracts of indemnity. These contracts are fire insurance, marine insurance,
theft insurance, etc. Under these contracts, insured pays premium to insurance company
and insurance company takes the responsibility of compensating the insured if he suffers
any loss on insured property.
a. Property Insurance This insurance helps you to prevent the losses against theft, fire,
burglary, or any natural calamity like Earthquake, Floods ect. Based on the points
mentioned in the policy.
b. Health Insurance Heath Insurance consists of a package of various types of
insurance related to health. For example Medical Insurance is one of the major part of
health insurance.
c. Auto Insurance Any financial loss due to accident of a vehicle is covered under the
auto insurance policy.
d. Traveling Insurance Loss of personal belongings while traveling, medical coverage,
delays in the travel are all part of the travel insurance policy.
e. Credit Insurance Type of insurance pays the loans of the policy hoder in case of any
accident of the policy holder or job loss or death.

B. Life Insurance Contract This contract is not a contract indemnity. Value of life of any
human being cannot be estimated hence it is very difficult to calculate the exact amount
loss. Under such contracts insured pays a fixed premium every year and either at the
expiry of policy or in his death.








Law 531 INSURANCE
Pineda, Alfremadel R.
Atty. Jinky Ramos