INSURANCE CODE

(RA No. 10607 amending PD No. 612, as amended)

DIFFERENCE
Chapter I, Title 1: Section 3

The paragraphs on minors and married women in taking out an insurance contract
and the exercise of the rights thereon were removed.

Chapter I, Title 2: Section 6

The word person in the paragraph was excluded. Thus, it impliedly provides that
a person cannot be duly authorized to transact insurance business.

Chapter I, Title 3: Sections 11 and 12

The presumption of irrevocability, where the insured does not change the
beneficiary during his lifetime, and, the rule on where the share shall pass in case it
was forfeited because of the willful bringing about of the life of the insured were
included.

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Chapter I, Title 5: Section 45

No changes were made in the rule on rescission due to false representation.

Chapter I, Title 6: Sections 50, 60, 64 and The paragraph on group insurance and group annuity policies were excluded.
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The definition of open policy was modified by including the qualification that the
amount of insurance merely represents the insurers maximum liability.
In case of Sec. 64, a new ground for cancellation of the insurance by the insurer
was included. The new provision provides that insurance may be cancelled by the
insurer on the ground that a determination of the Commissioner that the
continuation of the policy would violate or would place the insurer in violation of
this Code.

In case of Sec. 65, the broker, duly authorized in writing by the policy owner, may
receive the notice of cancellation on his behalf.
Chapter I, Title 8: Sections 77, 78 and 84

Sec. 77 A new provision provides a new exception that an insurance policy is

binding, in spite of non-payment of premium, whenever under the broker and
agency agreements with duly licensed intermediaries, a ninety day credit extension
is given. However, no credit extension should exceed ninety days from the date of
issuance of the policy.
Sec. 78 A new provision on government employees, with regard to payment of
insurance premiums, was included. It provides that government employees may
pay their insurance premium by way of salary deductions. Provided, that they are
authorized to do so.

Sec, 84 Moreover, a new provision on payments for future premiums or benefits

was included.
Chapter I, Title 10: Section 90

In case of Notice of Loss, written notice is already required for insurance against
fire. Moreover, the Commissioner has the power to specify the period for the
submission of notice of loss for non-life insurance.

Chapter I, Title 11: Section 96

Life insurance is excluded in the application of the rules on Double Insurance.

Furthermore, it provides that any amount received by the insured under any other
policy shall be deducted from the value of the policy in case of valued policy and
against the full insurable value in case of unvalued policy.

Chapter II, Title 1, Subtitle 1-A: Section

No substantial change was made in the definition of marine insurance.

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Chapter II, Title 2: Section 174

No substantial change was made in the rule on valuation of insurance against fire.

Chapter II, Title 3: Section 176

No substantial change was made in the definition of Casualty Insurance.

Chapter II, Title 5: Section 183

Chapter II, Title 6: Sections 187, 188 and
189
Chapter III, Title 1: Sections 190, 192,
193, 194, 197, 198 and 199

The rule in case of suicide was introduced.

New chapters, with respect to Microinsurance and Financial Reporting Framework
were introduced in the new code.
The term insurer or insurance company was modified by excluding individuals and
including cooperatives, who are engaged as principals in the insurance business.
Moreover, the new code changed the period of validity of an insurance company
from one year to three years. Thus, it shall expire on the last day of December (as
contrasted to the old code which provides that on the last day of June). Likewise,
insurance company who were issued with a valid certificate cannot be barred or
prevented from transacting any insurance business within its scope and coverage.

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Chapter III, Title 2: Sections 200 and 201

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The rule on solvency of an insurance company was modified. The new Code
provides that it shall maintain the minimum paid-up capital and net worth
requirements as prescribed by the Commissioner (as contrasted to the old Code
which provides that it shall maintain a margin of solvency exclusive of its paid-up
capital).
Moreover, the Commissioner was granted the power to prescribe solvency
requirements for branches of foreign insurance companies.

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Chapter III, Title 3: Section 202

The allowed and admitted assets, for determination of the financial condition of
any insurance company was modified by including sub-paragraph (j), which

provides for investments in mutual funds, real estate investment trust, salary loans,
unit investment trust funds and deposit accounts.
Chapter III, Title 4: Sections 198 to 206,
213, 215

The rule on solvency of an insurance company was modified. The new Code
provides that it shall maintain the minimum paid-up capital and net worth
requirements as prescribed by the Commissioner (as contrasted to the old Code
which provides that it shall maintain a margin of solvency exclusive of its paid-up
capital).
Moreover, the Commissioner was granted the power to prescribe solvency
requirements for branches of foreign insurance companies.

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The allowed and admitted assets, for determination of the financial condition of
any insurance company was modified by including sub-paragraph (j), which
provides for investments in mutual funds, real estate investment trust, salary loans,
unit investment trust funds and deposit accounts.
The exemptions on the rule that no insurance company shall loan any of its money
was expanded and it also provided the conditions which the loans shall be subject
to. Moreover, the paragraph on amortization and the definition of the improved
real estate mortgage was excluded.
Sec. 206 Paragraph (b), subparagraph (1) (5) and (8) were expanded by providing
additional qualifications. Moreover, it also introduced another enumeration as to
the property which the insurance company may purchase, own and convey (by
introducing subparagraph (7).

Chapter III, Title 5: Sections 216 to 219

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Sec. 216 The provisions were modified by removing the phrase upon the net
premium basis in the first paragraph, the distinctions made as to the standard
valuation was also disregarded in the second paragraph, and the results of such
valuations may be reported by the designated officer, not necessarily be the
actuary.
Sec. 219 The calculation provided in the old code was excluded and it was
referred to as the 24th method.

Chapter III, Title 6: Section 221

The Commissioner was authorized to issue regulations which provides for a

maximum limit on the overall retained risks of insurers.

Chapter III, Title 7: Sections 222 to 227

Sec. 225 The two (2) conditions prescribed by the old code in case of cession of
any insurance company who desires to cede their excess risks were removed. The
new code provides for a general qualification that it may only do so under the
terms and conditions which the Commissioner may prescribe.
Sec. 226 The rule on reporting of the particulars of reinsurance treaties was
modified, from every first day of January of every year to every three months from
their affectivity.
Annual statements shall be prepared in accordance with the financial reporting
framework as determined by the Commissioner. Thus, the Commissioner is
authorized to regulate the preparations of the said annual statement.

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Chapter III, Title 8: Sections 229 and 234

The rule on group insurance policy, particularly subparagraph (i), was modified. It
provides that in case of termination of group policy, the insured shall be entitled to
have an individual policy of life insurance subject to the same limitations as set
forth in par. (h) except that the group policy may provide that the amount shall not
exceed the smaller amount of the persons life insurance protection ceasing less the

amount of any like insurance for what he is or becomes eligible under any group
policy issued or reinstated, and two thousand pesos.
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Chapter III, Title 10: Section 244

Chapter III, Title 11: Sections 250 and
251
Chapter III, Title 13: Section 254

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Chapter III, Title 14: Section 255
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No substantial change was introduced.

Unlawful acts, with respect to claims settlement, were introduced.
The paid-up capital stock, in the case of a domestic stock, was changed into net
worth requirement.
A new paragraph was introduced providing that no insurance or any professional
reinsurer, ordered to be liquidated by the Commissioner may be rehabilitated or
authorized to transact anew.

Chapter III, Title 15: Sections 256 and

The provision on reasonable expenses and fees was excluded.
257
Chapter III, Title 17: Sections 268, 269 to All insurers mutualized under the Insurance Code shall be subject to such chapter
273, 275 and 276, 278, 279 and 280
and all other applicable provisions of this Code. The Corporation Code shall be
suppletory in character.
Chapter III, Title 18: Sections 282, 284,
285 and 287

Sec. 282 The rule on publication of the application for withdrawal was modified
from daily for one week in 2 newspapers of general circulation in City of Manila to
once a week for three consecutive weeks in a newspaper of general circulation in
the Philippines.
Sec. 284 The provision was modified, instead of residents of the Philippines, it
was changed to policyholders and creditors in the Philippines. Likewise, it
introduced a new qualification that it should have no uncancelled policies or that

its primary liabilities have been reinsured or assumed by another insurance

company.
Sec. 287 The validity of the special certification to operate as a servicing
insurance company was changed from last day of June to last day of December.
Moreover, instead of annual renewal, it was changed to every three years.

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Chapter III, Title 20: Sections 290 to 292, Penalty was increased from P500 to P5,000 for first violation, P2,500 to P25,000
301 to 303 and 306
for subsequent violation, and additional penalty from P2,500 to P25,000.