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2
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PHILIPPINES
SINGAPORE
VIETNAM
Areas of
Study
(excerpts)
(Insurance Code of the Philippines)
(Chapter 24: Insurance Law)
(Chapter 142: Insurance Act)
(Law on Insurance Business)
Meaning of
Insurance
Section 2 – (1) A "contract of
insurance"
is
an
agreement
whereby one undertakes for a
consideration to indemnify another
against loss, damage or liability
arising from an unknown or
contingent event. A contract of
suretyship shall be deemed to be
an insurance contract, within the
meaning of this Code, only if made
by a surety who or which, as such,
is doing an insurance business as
hereinafter provided.
Insurance Commission
Ministry of Finance
Monetary Authority of Singapore
Section 2d – In the application of
the provisions of this Code the fact
that no profit is derived from the
making of insurance contracts,
agreements or transactions or that
no separate or direct consideration
is received therefore, shall not be
deemed conclusive to show that
the making thereof does not
constitute the doing or transacting
of an insurance business.
Chapter 24.1.1 – Insurance,
which involves the allocation and
spread of risk, is an extremely
important part of a country’s
financial sector. It transfers the
risk undertaken by an individual
or an organization in a particular
activity onto a company that is
paid to assume that risk (known
as the insurer).
By taking out an insurance policy
on that activity, the individual or
organization (known as the
insured) is able to pass on the risk
of an adverse event occurring.
The risk of future losses appears
to be borne by the insurer, but by
charging a fee or premium for
this service, the insurer is
effectively spreading the loss
amongst all those who pay for the
privilege. Nevertheless, the aim
of insurance would be achieved –
no individual has to bear the risk
of loss himself.
Chapter 1 Article 3.1 –
Insurance business means
the operation carried out by
insurance enterprises for the
purpose
of
profit
generation, whereby the
insurance enterprises accept
risks incurred by the insured
on the basis of insurance
premium payment by the
insurance buyers so that the
insurance enterprises shall
pay the insurance money to
the beneficiary or indemnify
the insured when the
insured events occur.
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2
PHILIPPINES
SINGAPORE
VIETNAM
Areas of
Study
(excerpts)
(Insurance Code of the
Philippines)
(Chapter 24: Insurance Law)
(Chapter 142: Insurance Act)
(Law on Insurance Business)
Insurance Commission
Monetary Authority of Singapore
Insurance
Regulation
Section 414 – The Insurance
Commissioner shall have the
duty to see that all laws
relating to insurance, insurance
companies and other insurance
matters,
mutual
benefit
associations, and trusts for
charitable uses are faithfully
executed and to perform the
duties imposed upon him by
this
Code,
and
shall,
notwithstanding any existing
laws to the contrary, have sole
and exclusive authority to
regulate the issuance and sale
of variable contracts as defined
in section two hundred thirtytwo and to provide for the
licensing of persons selling such
contracts, and to issue such
reasonable
rules
and
regulations
governing
the
same.
Chapter 24.1.11 – The Singapore
Government closely regulates the
carrying on of insurance business.
The actual regulatory authority
appointed
to
oversee
the
insurance
industry
is
the
Monetary
Authority
of
Singapore. The Insurance Act
lays down the various provisions
which regulate insurance business
and seeks primarily to protect the
insuring public from being left
without insurance coverage by
failed
companies
and
unscrupulous businesses.
Ministry of Finance
Chapter 24.1.12 – The regulation
of insurance is thus important to
instill confidence in the public and
to ensure that minimum standards
are met in this industry. In that
way, the regulation of insurance
refers to the authorities’ control
over the actions and activities of
insurers,
whereas
the
legal
principles
derived
from
the
different sources of law govern the
insurance relationship between the
parties to the insurance contract.
Article 121 – (1) The Government
shall exercise the uniform State
management of insurance business.
(2) The Finance Ministry shall take
responsibility to the Government
for the implementation of State
management over the insurance
business.
(3) The ministries, ministerial-level
agencies and agencies attached to
the Government shall, within the
scope of their respective tasks and
powers,
exercise
the
State
management
over
insurance
business according to the provisions
of law.
(4) The People's Committees at all
levels shall, within the scope of
their respective tasks and powers,
exercise the State management
over insurance business in the
localities
according
to
the
provisions of law.
The responsibilities of the Ministry
of
Finance
for
the
state
management of insurance business
is laid out in Article 46 of Decree
4
42.
Areas of
Study
(excerpts)
PHILIPPINES
SINGAPORE
VIETNAM
(Insurance Code of the Philippines)
(Chapter 24: Insurance Law)
(Chapter 142: Insurance Act)
(Law on Insurance Business)
Insurance Commission
Ministry of Finance
Monetary Authority of Singapore
3
The
Contract of
Insurance/
What May Be
Insured
Section 3 – Any minor of the age
of eighteen years or more, may,
notwithstanding such minority,
contract for life, health and
accident insurance, with any
insurance
company
duly
authorized to do business in the
Philippines, provided the insurance
is taken on his own life and the
beneficiary appointed is the
minor's estate or the minor's
father, mother, husband, wife,
child, brother or sister.
The married woman or the minor
herein allowed to take out an
insurance policy may exercise all
the rights and privileges of an
owner under a policy. All rights,
title and interest in the policy of
insurance taken out by an original
owner on the life or health of a
minor shall automatically vest in
the minor upon the death of the
original owner, unless otherwise
provided for in the policy.
Chapter 24.2.10 – In general, an
insured who lacks capacity to
contract may be a minor, or a
person who was mentally unsound
or intoxicated at the time of
contracting. The problem that an
insurer faces should it contract
with a minor is that the contract
may be unenforceable against the
minor. In most cases, this involves
the non-payment of premiums by
the under-aged insured, which the
insurer would be unable to
enforce.
The common law age of majority
in Singapore is 21 years. Despite
this, section 58 of the Insurance
Act (IA) states that anyone above
the age of ten shall be treated as
a contracting party with full
capacity, subject to the proviso
that a person under 16 years of
age needs the written consent of
his parent or guardian. This
provision enables minors to enter
into insurance contracts without
the problems of minority hanging
over them.
Article 31 – Objects of
person
insurance
contracts:
(1) The objects of person
insurance contracts shall be
the human age, life, health
and accidents
(2) The insurance buyers
may only buy insurance for
the following persons:
a) The insurance
themselves
buyers
b) Their spouses, children
and/or parents
c) Their blood brothers and
sisters; person with ties of
fostering
and
financial
support
d) Other persons, if the
insurance buyers have the
interests that can be insured
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4
PHILIPPINES
SINGAPORE
VIETNAM
Areas of
Study
(excerpts)
(Insurance Code of the Philippines)
(Chapter 24: Insurance Law)
(Chapter 142: Insurance Act)
(Law on Insurance Business)
Insurable
Interest
Section 10 – Every person has an
insurable interest in the life and
health:
Insurance Commission
Ministry of Finance
Monetary Authority of Singapore
(a) Of himself, of his spouse and of
his children
(b) Of any person on whom he
depends wholly or in part for
education or support, or in whom he
has a pecuniary interest
(c) Of any person under a legal
obligation to him for the payment of
money, or respecting property or
services, of which death or illness
might
delay
or
prevent
the
performance; and
(d) Of any person upon whose life any
estate or interest vested in him
depends.
Section 14 – An insurable interest in
property may consist in:
(a) An existing interest
(b) An inchoate interest founded on
an existing interest; or
(c) An expectancy, coupled with an
existing interest in that out of which
the expectancy arises.
Section 100 and 101 deals with the
insurable interest involving ships.
Chapter 24.3.6 – In the absence of
a statutory definition, the meaning
of insurable interest is derived
largely from case law. It is
generally accepted that the
insured must show that he would
suffer financially by the loss of a
legal right or the assumption of a
legal obligation/liability on the
death of the life insured. So a
creditor has insurable interest in
his debtor’s life because the
creditor loses his right of action
against the debtor on the latter's
death.
Chapter 24.3.13 – Insurable
interest in non-life insurance
means a right in the property, or a
contractual right, which may be
lost upon the happening of an
adverse event which affects the
insured’s possession or enjoyment
of the property.
Article 3.9 – Insurable
interests mean the rights to
ownership, the rights to
possession, the right to use,
the property rights; the
rights and obligations to
foster and provide financial
support for insured objects.
Article 3.10 – Insured
events
mean
objective
events
mutually
agreed
upon by the parties or
prescribed by law upon the
occurrence of which the
insurance enterprises shall
have to pay the insurance
money to the beneficiaries
or pay indemnities to the
insured.
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Areas of Study
(excerpts)
5
Misrepresentation
PHILIPPINES
SINGAPORE
VIETNAM
(Insurance Code of the
Philippines)
(Chapter 24: Insurance Law)
(Chapter 142: Insurance Act)
(Law on Insurance Business)
Insurance Commission
Monetary Authority of Singapore
Section
111
–
If
a
representation by a person
insured by a contract of
(marine)
insurance,
is
intentionally false in any
material respect, or in
respect of any fact on which
the character and nature of
the risk depends, the
insurer may rescind the
entire contract.
Chapter 24.4.18 – An insurer may
avoid the contract of insurance if it
was induced to enter into it by a
misrepresentation of a material fact,
made by the insured before the
contract was entered into. As such,
misrepresentations are usually made
by the insured when completing the
proposal form. Apart from the added
element of materiality which arguably
limits the insured’s liability for his
false statements, the legal principles
here are similar to that under general
contract law. As a means of avoiding
the contract, it is usually considered
less important than the doctrine of
non-disclosure and has often been
subsumed by it as a result.
Ministry of Finance
Section 231(b) – A provision
that gives the insurer the
right to declare the policy
void because the insured
has been rejected for
insurance, unless such right
be conditioned upon a
showing by the insurer that
knowledge of such rejection
would have led to a refusal
by the insurer to make such
contract.
Nevertheless, it is different from nondisclosure
as
misrepresentation
focuses on the untruth of statements
made by the insured whereas nondisclosure deals with the insured’s
silence. It is usual for the insurer to
plead both grounds of avoidance since
the duty to answer questions correctly
on a proposal form is also part of the
insured’s duty of good faith.
Article 19.2 – Insurance
enterprises
may
unilaterally suspend the
performance of insurance
contracts and collect the
premiums to the time of
suspending
the
performance
of
the
insurance contracts when
the
insurance
buyers
commit
one
of
the
following acts:
a) Intentionally supplying
untruthful information with
a view to entering into
insurance
contracts
in
order to be paid with the
insurance money or the
indemnities.
b) Failing to fulfill the
obligations
to
supply
information
to
the
insurance enterprises as
provided for at Point c,
Clause 2, Article 18 of this
Law.
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Areas of Study
(excerpts)
6
Insurance
Policy/Contract
PHILIPPINES
SINGAPORE
VIETNAM
(Insurance Code of the
Philippines)
(Chapter 24: Insurance Law)
(Chapter 142: Insurance Act)
(Law on Insurance Business)
Insurance Commission
Monetary Authority of Singapore
Section 49 – The written instrument,
in which a contract of insurance is
set forth, is called a policy of
insurance.
Chapter 24.2.1 – The general
principles of contract law apply to
the insurance contract with respect
to its formation. For example, the
contract need not be in writing and
oral contracts are acceptable.
However, there are statutory
requirements of writing for certain
types of insurance contracts such
as
motor
insurance,
marine
insurance and life insurance. It is
also standard practice amongst
insurers to issue a policy document
with the result that oral insurance
contracts are seldom found.
Ministry of Finance
Section 50 – The policy shall be in
printed form which may contain
blank spaces; and any word, phrase,
clause,
mark,
sign,
symbol,
signature,
number,
or
word
necessary to complete the contract
of insurance shall be written on the
blank spaces provided therein.
Section 51 – A policy of insurance
must specify:
(a) The parties between whom the
contract is made
(b) The amount to be insured except
in the cases of open or running
policies
(c) The premium, or if the insurance
is of a character where the exact
premium is only determinable upon
the termination of the contract, a
statement of the basis and rates
upon which the final premium is to
be determined
(d) The property or life insured
(e) The interest of the insured in
property insured, if he is not the
absolute owner thereof
(f) The risks insured against; and
(g) The period during which the
insurance is to continue.
Chapter 24.2.2 – Given that the
ordinary legal rules apply, the four
legal elements that are essential to
create a binding contract are offer,
acceptance, consideration, and
intention to create legal relations.
Chapter 24.2.3The offer may be
made by either the insured or the
insurer –, although it is usually the
insured who makes it.
Chapter 24.2.4 – Once agreement
has been established, consideration
must be shown to support the
agreement.
Article
12
–
Insurance
Contracts
(1) An insurance contract is
the
agreement
reached
between the insurance buyer
and an insurance enterprise
whereby the insurance buyer
shall have to pay premiums
while the insurance enterprise
shall have to pay insurance
money to the beneficiary or
the indemnity to the insured
upon the occurrence of the
insured event.
(2)
Types
of insurance
contract shall include:
a) Person insurance contracts
b) Property insurance
contracts
c) Civil liability insurance
contracts.
Article 14 – The insurance
contracts must be made in
writing. The evidence of
conclusion
of
insurance
contracts
shall
be
the
insurance
certificates,
insurance
applications,
telegrams, telexes, faxes and
other forms prescribed by law.8
7
PHILIPPINES
SINGAPORE
VIETNAM
Areas of
Study
(excerpts)
(Insurance Code of the
Philippines)
(Chapter 24: Insurance Law)
(Chapter 142: Insurance Act)
(Law on Insurance Business)
Insurance Commission
Monetary Authority of Singapore
Compulsory
Insurance
Section 375 – The Commissioner
shall
furnish
the
Land
Transportation Commissioner with a
list
of
insurance
companies
authorized to issue the policy of
insurance or surety bond required
by this chapter. (As amended by
Presidential Decree No. 1814).
Chapter 24.6.9 – The Motor
Vehicles (Third Party Risks and
Compensation) Act (Cap 189, 2000
Rev Ed) makes it compulsory for
motorists to insure against liability
for causing death or personal
injury to other road users. The
injured victim is not a party to the
insurance contract. But under the
Motor Vehicles (3rd Party Risks and
Compensation) Act, he is granted
an enforceable right to claim
damages from the insurer if he
first obtains judgment against the
motorist. The issue arises as to
whether the injured victim of a
road accident is able to claim if
the motorist had committed a
traffic offence (such as drunken
driving or causing death by a rash
or negligent act).
Ministry of Finance
Section
376
–
The
Land
Transportation Commission (now as
Land Transportation Office) shall
not allow the registration or
renewal of registration of any
motor
vehicle
without
first
requiring
from
the
land
transportation operator or motor
vehicle owner concerned the
presentation and filing of a
substantiating documentation in a
form approved by the Commissioner
evidencing that the policy of
insurance or guaranty in cash or
surety bond required by this
chapter is in effect. (As amended
by Presidential Decree No. 1455).
R.A. 10022, known as the Migrant
Workers and Overseas Filipinos
Act of 1995, also requires
mandatory insurance coverage for
all OFWs deployed by recruitment
and manning agencies (Section 23).
The objective of compulsory motor
insurance is the protection of
victims of road accidents and
public policy tends to operate in
favor of the injured victim because
compensation of the injured victim
is stronger policy consideration
than deterrence.
Article 8 - The compulsory
insurance means a type of
insurance
for
which
the
conditions, premium rates and
minimum insurance sum are
prescribed by law for compulsory
implementation by both the
organizations
or
individuals
participating in insurance and the
insurance
enterprises.
The
compulsory insurance shall only
apply to a number of insurance
types
for
the
purpose
of
protecting the public interests and
social safety. The compulsory
insurance shall include:
a) Motorized vehicle owners' civil
liability insurance, insurance of air
carriers' civil liability toward
passengers
b) Professional liability insurance
for legal consultancy operations
c) Insurance brokerage enterprises’
professional liability insurance
d) Fire and explosion insurance
Depending on the socio-economic
development demands of each
period, the Government shall
submit to the National Assembly
Standing Committee other types
of compulsory insurance for its
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prescription.
8
PHILIPPINES
SINGAPORE
VIETNAM
Areas of
Study
(excerpts)
(Insurance Code of the
Philippines)
(Chapter 24: Insurance Law)
(Chapter 142: Insurance Act)
(Law on Insurance Business)
Insurance Commission
Monetary Authority of Singapore
Mutual
Benefit
Associations
(MBAs)
Section 390 – Any society,
association
or
corporation,
without capital stock, formed or
organized not for profit but
mainly for the purpose of paying
sick benefits to members, or of
furnishing financial support to
members
while
out
of
employment, or of paying to
relatives of deceased members of
fixed or any sum of money,
irrespective of whether such aim
or purpose is carried out by means
of fixed dues or assessments
collected regularly from the
members, or of providing, by the
issuance
of
certificates
of
insurance,
payment
of
its
members of accident or life
insurance benefits out of such
fixed and regular dues or
assessments, but in no case shall
include any society, association,
or corporation with such mutual
benefit features and which shall
be carried out purely from
voluntary contributions collected
not regularly and or no fixed
amount from whomsoever may
contribute, shall be known as a
mutual benefit association within
the intent of this Code.
Chapter 191 – Mutual Benefit
Organisations Act
(2) In this Act, unless the context
otherwise requires — “benefit” means
the payment made by a mutual
benefit organisation for the relief or
maintenance of the members or
subscribers or on birth or death in
accordance with the rules of the
mutual benefit organisation; “mutual
benefit
organisation”
or
“organisation”
means
any
organisation which by its objects and
rules either as the principal object or
as an ancillary object makes provision
by voluntary subscriptions of the
members thereof or subscribers
thereto with or without the aid of
donations for
(a) the relief or maintenance of the
members or subscribers (and their
beneficiaries; i.e. husband, wife,
child, parents)
(b) the payment of money on the
birth of a member’s or subscriber’s
child or on the death of a member or
subscriber (and their beneficiaries;
i.e. husband, wife, child, parents)
(c) the relief or maintenance of the
members
or
subscribers
when
unemployed or when in distressed
circumstances.
Ministry of Finance
Article 70 – Mutual support
insurance organizations
The mutual support insurance
organizations are those having the
legal person status, which are
established to conduct insurance
business for the purpose of
providing mutual support and
assistance among members. The
members of mutual support
insurance organizations are the
owners and the insurance buyers
too.
Article 71 – Members of mutual
support insurance organizations:
(1) Vietnamese organizations and
citizens aged full 18 years or
older, who have full capacity for
civil acts, that operate in the
same field, the same occupation
and have the demand for
insurance may all join in founding
the mutual support insurance
organizations in the capacity as
the founding members.
(2)
Only
organizations
and
individuals
that
enter
into
insurance contracts with mutual
support insurance organizations
can become members of the
mutual
support
insurance
organizations.
10
Areas of
Study
PHILIPPINES
SINGAPORE
VIETNAM
(Insurance Code of the Philippines)
(Chapter 24: Insurance Law)
(Chapter 142: Insurance Act)
Monetary Authority of Singapore
(Law on Insurance Business)
Section 99 – Marine Insurance
Chapter 24.1.4 – Marine Insurance
(2) "Marine protection and indemnity
insurance," meaning insurance against, or
against legal liability of the insured for loss,
damage, or expense incident to ownership,
operation, chartering, maintenance, use,
repair, or construction of any vessel, craft or
instrumentality in use of ocean or inland
waterways
refers to all the types of insurance that
deal with maritime risks. This is a very
specialized category which is usually
governed by the marine insurance
legislation of the relevant country. Nonmarine Insurance refers to all other
types of insurance that do not involve
maritime risks.
Article 7 – Types of Insurance
Operation
Section 167 – Fire Insurance
Chapter 24.1.6 – Life Policies may be
Insurance against loss by fire, lightning,
windstorm, tornado or earthquake and other
allied risks, when such risks are covered by
extension to fire insurance policies or under
separate policies
obtained on one’s own life, or on
another’s, subject to the need for an
insurable interest. Where the policy
insures the life of another, the term used
to describe that person is “life insured.”
Section
Chapter 24.1.7 – Non-life insurance
denotes all types of insurance that do
not have a life as the subject matter of
the policy. These range from fire
insurance over property to motor
insurance to insurance against legal
liability. The insurance statutes would
refer to non-life insurance as general
insurance business.
Insurance Commission
(excerpts)
9
Types of
Insurance
174
–
Casualty
Insurance
(written by Non-Life Insurance Companies)
Casualty insurance is insurance covering loss
or liability arising from accident or mishap
Section 175 – Suretyship
A contract of suretyship is an agreement
whereby a party called the surety guarantees
the performance by another party called the
principal or obligor of an obligation or
undertaking in favor of a third party called
the obligee
Section 179 – Life Insurance
Life insurance is insurance on human lives
and insurance appertaining thereto or
connected therewith. (180) An insurance
upon life may be made payable on the death
of the person, or on his surviving a specified
period, or otherwise contingently on the
continuance or cessation of life
Chapter 24.1.9 – First Party Insurance
refers to insurance that is taken up by
an insured on his own life or property,
and
under which he,
or
his
beneficiaries, will make a claim for loss
suffered. Third Party Insurance insures
against one’s potential liability to make
payment to a third party who succeeds
in a legal action. It is also known as
liability insurance.
Ministry of Finance
1. Life insurance shall include:
(a) Whole life insurance
(b) Endowment insurance
(c) Term insurance
(d) Combined insurance
(e) Annuity
(f) Other life insurance operations
prescribed by the Government.
2. Non-life insurance shall
include:
(a) Health insurance and human
accident insurance
(b) Property insurance and
damage insurance
(c) Land, marine, river, railway
and air cargo transport insurance
(d) Aviation insurance
(e) Motorized vehicle insurance
(f) Fire and explosion insurance
(g) Hull insurance and shipowners' civil liability insurance
(h) Common liability insurance
(i) Credit insurance and financial
risks insurance
(j) Business loss insurance
(k) Agricultural insurance
(l) Other non-life insurance
operations prescribed by the
Government
3. The Finance Ministry shall
make a detailed list of insurance
products.
11
Areas of
Study
10
PHILIPPINES
SINGAPORE
VIETNAM
(Insurance Code of the Philippines)
(Chapter 24: Insurance Law)
(Chapter 142: Insurance Act)
(Law on Insurance Business)
(excerpts)
Insurance Commission
Laws and
Adjudication
The Insurance Code of the Philippines is
American in origin; having been principally
patterned on the Civil Code of California.
The following laws are currently related to
the insurance business:
Ministry of Finance
Monetary Authority of Singapore
1.) Insurance Code 1978 (PD 1460 which
superseded PD 612)
2.) Special laws, and partly the provisions
of the Civil Code, namely Articles 749 and
2012 on void donations, Article 2011 on
the applicability of the Civil Code, Articles
22021-2027 on life annuities, and article
2186 on compulsory motor vehicle liability
insurance
3.) Property Insurance Law (RA 656 as
amended by PD 245) which deals with
government property
4.) Article 2011 of the Civil Code states
that if the Insurance Code does not
specifically provide for a particular matter
in question, the provisions of the Civil
Code regarding contracts shall govern. As
to the hierarchy of laws, therefore,
insurance contracts are governed primarily
by the Insurance Code and subsidiarily by
the Civil Code. In case of conflict, the
Insurance Code will apply.
Note: The 1978 Insurance Code is currently
being amended in the Philippine Congress.
In Singapore, the following laws
impinge
on
the
insurance
business:
In Vietnam, the following
laws deal with the insurance
business:
1.) Insurance Law (Chapter 24)
1.) Law No. 24/2000/QH10
(a.k.a. Law on Insurance
Business)
2.) Insurance Act (Chapter 142)
3.) Financial Advisors Act
4.) Insurance (Amendment) Act
2001
5.)
Insurance
Regulations 2002
2.) Decree No. 42/2001/NDCP
3.) Decree No. 43/2001/NDCP
(Exemption)
4.)
Circular
71/2001/TT-BTC
No.
6.) Insurance (Exemption and
Provisions Applicable for Direct
Life Insurers) Regulations 2002
7.) Insurance (Protection and
Indemnity Clubs) Regulations
2002
8.) Insurance (Amendment) Act
(Commencement)
(No.
2)
Notification 2002
12
Areas of
Study
(excerpts)
11
Right to
Subrogation
PHILIPPINES
SINGAPORE
VIETNAM
(Insurance Code of the
Philippines)
(Chapter 24: Insurance Law)
(Chapter 142: Insurance Act)
(Law on Insurance Business)
Insurance Commission
Monetary Authority of Singapore
Section 416 – With leave
of the Commissioner, an
insurer or surety may file a
third-party
complaint
against its reinsurers for
indemnification,
contribution, subrogation
or any other relief, in
respect of the transaction
that is the subject matter
of the original action filed
with the Commissioner.
Chapter 24.8.3 – Subrogation literally
means the substitution of one person for
another. The purpose of subrogation is to
prevent the unjust enrichment of the
insured. There are two aspects to
subrogation.
Ministry of Finance
The Right of Subrogation
attaches upon payment by
the
insurer
of
the
insurance claims by the
assured. As subrogee, the
insurer steps into the
shoes of the assured and
may exercise only those
rights that the assured may
have
against
the
wrongdoer who caused the
damage.
[G.R.
No.
168402, August 06, 2008
ABOITIZ
SHIPPING
CORPORATION,
PETITIONER,
VS.
INSURANCE COMPANY OF
NORTH
AMERICA,
RESPONDENT].
Chapter 24.8.4 – First, the insured
cannot make a profit from his loss and
for any profit he does make, he is
accountable to his insurer who has
indemnified him. In this respect, the
insured is considered to have been more
than indemnified for a loss when he
recovers his loss from the insurer and
receives payment of compensation from
a third party as well.
Chapter 24.8.5 – Secondly, the insurer
who has indemnified the insured has the
right to step into the shoes of the
insured and in his name enforce any
legal right of recourse available to the
insured, including a right of action
against the third party who caused the
loss. The insured's right of action usually
involves suing a third party, who is liable
to pay damages in tort or for breach of
contract, for having caused the loss. The
cause of action still belongs to the
insured and the insurer is subject to any
defenses that the third party may have
against the insured. The insured has a
duty to assist the insurer in enforcing
these claims.
The Law permits subrogation except in the
case of personal insurance, such as life
insurance, labor accident insurance, and
medical insurance (Article 17 Section 1a
to g).
After paying the insurance proceeds to the
insured, the enterprise has the right to
claim compensation from responsible third
parties for the amount it has paid out to
the insured. The insured must provide the
enterprise with all of the necessary
information and evidence so that the
enterprise can exercise its legal right of
subrogation. Recognition of the insurance
enterprise’s right to collect compensation
is authorized by a letter from the insured
authorizing the insurance enterprise to
collect from third parties. When a
responsible third party has paid damages
to the insured, but the damages are lower
than the value of the insurance policy, the
insurance enterprise need only pay the
insured the difference between the policy
value and the damages already paid by the
third party.
The Law on Insurance Business does not
address the enterprise’s right of refusal,
but it does note that if the insured
declines to authorize the enterprise, or
waives, fails to reserve, or otherwise loses
the right to request third party
compensation, the enterprise may deduct
the indemnity payable to the insured.
13
Areas of
Study
(excerpts)
12
Licensing
Requirements
PHILIPPINES
SINGAPORE
VIETNAM
(Insurance Code of the
Philippines)
Insurance Commission
(Chapter 24: Insurance Law)
(Chapter 142: Insurance Act)
Monetary Authority of Singapore
(Law on Insurance Business)
Section 187 – A certificate
of authority (CA) from the
Insurance Commission is
required
before
an
insurance
company can
transact
any
insurance
business in the Philippines.
Insurance Act: Section 3
Under Section 184 of the
Insurance Code, the term
“insurer” or “insurance
company”
includes
all
individuals,
partnerships,
associations or corporations;
including
government
owned
or
controlled
business
but
excludes
mutual benefit associations.
(2) Any person who contravenes subsection
(1) shall be guilty of an offence and shall
be liable on conviction to a fine not
exceeding $30,000 or to imprisonment for a
term not exceeding 3 years or to both and,
in the case of a continuing offence, to a
further fine of $2,000 for every day during
which the offence continues after
conviction.
The Code further provides
that a person, partnership
or association of persons
can
only
transact
an
insurance business as an
agent of a person or
corporations authorized to
do the business of insurance
in the Philippines unless
possesses capital and asset
required of an insurance
corporation and invested
likewise.
(1) Subject to this Act, no person shall
carry on any class of insurance business in
Singapore as an insurer unless the person is
registered by the Authority under this Act
in respect of that class of business.
In Singapore, a certain procedure is
required before the submission of formal
application by the new applicant: (1)
submit its business plan for the
Authority’s assessment; and (2) meets
the Authority to discuss the proposed
insurance operation.
Thereafter, the applicant would formally
be able to apply to the Authority using the
prescribed application form and a reply will
be obtained within 1 month from the date
on which a complete application has been
received. A letter of in-principle approval
specifies the condition that the applicant
must accept before it can carry on
insurance business in Singapore.
Ministry of Finance
Article 62 – Competence to grant
establishment
and
operation
licenses
1. The Finance Ministry shall grant
establishment and operation licenses
to insurance enterprises according to
the provisions of this Law and other
relevant law provisions.
2. The granting of establishment and
operation licenses to insurance
enterprises must be in line with the
planning and plans on orientation for
the development of insurance
market and the financial market of
Vietnam.
Article 63 – Conditions for being
granted the establishment and
operation licenses
1. Having the contributed legal capital
not being lower than the legal capital
amount prescribed by the Government
2. Having the dossiers of application
for establishment and operation
licenses made according to the
provisions in Article 64 of this Law.
3. Having types of enterprise and
charters
compatible
with
the
provisions of this Law and other law
provisions
4. The administrative and executive
personnel have the capabilities for
management, insurance profession and
14
operation.
Areas of
Study
(excerpts)
13
Capital
Requirements
PHILIPPINES
SINGAPORE
VIETNAM
(Insurance Code of the
Philippines)
(Chapter 24: Insurance Law)
(Chapter 142: Insurance Act)
(Law on Insurance Business)
Insurance Commission
Monetary Authority of Singapore
Php175 million (US$4.1 million)
SG$5 million (US$4 Million)
For life and non-life insurers
carrying on only one type of
insurance business
Ministry of Finance
To increase to Php250 million
(US$5.9 million) on December
31, 2012 (Pursuant to DO 27-06
& IMC No. 10-2006)
VND600 billion (US$28.3 million)
Life Insurance Companies
VND300 billion (US$14.1 billion)
Non-Life/General Insurance
SG$10 million (US$8 million)
For life and non-life insurers
carrying on more than one type
of insurance business
SG$25 million (US$20 million)
Professional Reinsurer
Financial resources of the
insurer are not less than the
sum of the aggregate risk
requirement of all insurance
funds
established
and
maintained by the insurer
under the Act.
(all exchange rates as of Sept. 6, 2012)
15
Areas of
Study
(excerpts)
14
Annual Fees
PHILIPPINES
SINGAPORE
VIETNAM
(Insurance Code of the
Philippines)
(Chapter 24: Insurance Law)
(Chapter 142: Insurance Act)
(Law on Insurance Business)
Insurance Commission
Monetary Authority of Singapore
Ministry of Finance
Payment for the issuance or
renewal of CAs, licenses and
certificates of registration is
made
to
the
Insurance
Commissioner under Section
417(1) of the Insurance Code
as may be prescribed.
Such CA expires on the last day
of June each year and shall be
renewed
annually
if
the
company is continuing to comply
with the provisions of the said
Code and other related laws as
well as to the jurisdiction and
supervision of the Commissioner.
Section 11 – Annual Fees
Article 66 – Licensing fee
(1) Every registered insurer
shall pay to the Authority such
annual fees as may be
prescribed.
The insurance enterprises which
are granted the establishment
and operation licenses shall have
to pay the licensing fees
according to the provisions of law.
(2) The Authority may prescribe
different annual fees for
different classes of insurance
business or for different types
of registered insurers.
The current fee as stipulated in
Article 7 of Decree 42/2001 is
0.1% of the legal capital of the
applicant.
(3) The Authority may exempt
wholly or in part any registered
insurer from the payment of
the annual fees prescribed
under this section.
16
Areas of
Study
(excerpts)
15
Cancellation,
Appeal and
Effects of
Cancellation
of License
PHILIPPINES
SINGAPORE
VIETNAM
(Insurance Code of the
Philippines)
(Chapter 24: Insurance Law)
(Chapter 142: Insurance Act)
(Law on Insurance Business)
Insurance Commission
Monetary Authority of Singapore
The Insurance Code of the
Philippines
has
provisions
whereby the Commissioner has
powers to suspend or revoke CAs
granted to insurance companies,
their officers and agents.
The Singapore Act provides that
the Monetary Authority of
Singapore (MAS) shall, after
giving the insurer notice of its
intention
to
cancel
the
registration, call upon the
insurer to show cause to the
Authority why its registration
should
not
be
cancelled
(Insurance Act Section 12
(3)(b).
Ministry of Finance
Under Section 247, the effect
of the revocation of the CA is
such that no new business can
thereafter be conducted by such
company or for such company by
its agents in the Philippines until
and unless its authority to do
business is restored by the
Insurance Commissioner.
Section
299
additionally
provides that the Commissioner
has to satisfy himself as to the
competence and trustworthiness
of the license applicant and
shall have the right to suspend
and revoke any license in his
discretion.
Through this mechanism,
insurer is provided with
opportunity to persuade
Authority before decision
cancellation is made.
the
an
the
for
The effect of cancellation
under the Insurance Act
Section 13 provides that the
insurer shall cease to carry on
in Singapore the said insurance
business from the date of
cancellation.
Article 51 of Decree 42/2001
states that The Ministry of
Finance can impose the following
sanctions:
a.) Warning
b.) Temporary
operation
suspension
of
c.) Restricting the contents,
scope and geographical area of
operation
d.) Withdrawing license
The decisions to deal with the
breaches must be made in writing
to the violators and relevant
bodies and shall be made public.
Article 126 of the Law of
Insurance Business provides for
appeals to the Ministry of Finance
or to the courts.
17
Areas of
Study
(excerpts)
16
Minimum
Solvency
Requirements
PHILIPPINES
SINGAPORE
VIETNAM
(Insurance Code of the
Philippines)
(Chapter 24: Insurance Law)
(Chapter 142: Insurance Act)
(Law on Insurance Business)
Insurance Commission
Monetary Authority of Singapore
Insurance companies must
always maintain a margin of
solvency in an excess of the
value of its admitted assets
excluding its paid-up capital
(for domestic insurer) or
security deposits (for foreign
insurer) over the amount of
its
liabilities,
unearned
premiums and reinsurance
reserves in the Philippines by
at least:
Section 18(2) of the Singapore Act provides
that the Authority (MAS) will prescribe
different margins of solvency (MOS) for
different classes of insurance business.
Ministry of Finance
a.)
For
life
insurance
companies – two (2) per mille
of the total amount of its
insurance in force as of the
preceding
calendar
year
(with the exception of term
insurance)
b.) For other insurance
companies – 10% of the total
amount of its net premium
written during the preceding
calendar year (Section 194)
Insurers are required to establish and
maintain a separate fund for:
1. Each class of insurance business related
to Singapore policies which is referred to as
the Singapore Insurance Fund (SIF); and
2. For each class of insurance fund related
to off-shore policies known as the Offshore
Insurance Fund (OIF)
Insurers are required to maintain a Solvency
Margin for each insurance fund as well as
the Company Solvency Margin (CSM). The
CSM is stipulated as a fixed amount, which
is determined by the type of insurers (life
or non-life only, composite or captive).
For life business, the SIF solvency margin is
determined based on liabilities and sum
insured at risk. OIF has to maintain assets
not less than liabilities of the fund.
Article 15 of Decree
43/2001 states that for
non-life
insurance
companies, the minimum
solvency margin shall be
equal to 20% of the retained
premiums at the time of
determining the solvency
margin.
As
for
life
insurance
companies, the minimum
solvency
margins
for
insurance contracts with a
term of 10 years or less
should be 4% technical
reserves plus 0.1% of the net
amount at risk and for
contracts for terms over 10
years, the margins should be
4% technical reserves plus
0.3% of net amount at risk.
For non-life business, SIF solvency margin
and OIF solvency margin are determined
based on net premiums or loss reserves.
18
All jurisdictions, with Singapore ahead
of the rest, are now moving towards a
risk-based supervision.
In the Philippines, a pertinent RBC
provision is being proposed to replace
the MOS.
19
Areas of
Study
(excerpts)
17
Inspections
and
Investigations
PHILIPPINES
SINGAPORE
VIETNAM
(Insurance Code of the
Philippines)
(Chapter 24: Insurance Law)
(Chapter 142: Insurance Act)
(Law on Insurance Business)
Insurance Commission
Monetary Authority of Singapore
The Commissioner shall require
every insurance company doing
business therein to keep its
books, records, accounts and
vouchers in such manner that he
or his authorized representatives
may readily verified its annual
statements
and
ascertain
whether the company is solvent
(Section 245).
The Authority in Singapore may for
the purpose of performing its
functions inspect the books,
accounts and other documents of
any registered insurer.
(Section 40.1a)
Ministry of Finance
Financial
inspection
for
insurance enterprises may be
conducted no more than once a
year
and
extraordinary
inspections are only permitted
when there are signs of
violation of the laws by the
The Authority may also institute an insurance enterprises.
investigation into the whole or any (Article 122)
part of the business carried out in
Singapore (Section 40.1b). It also
has the powers to enter any
premises of the insurer at all
reasonable times (Section 40.1c).
The Authority has moved towards a
risk-based supervision as opposed
to a rule-based supervision. The
frequencies of supervision are
determined by the size and the risk
underwritten by the insurer.
20
In all three jurisdictions, the insurance
regulators conduct on-site and off-site
inspections and examinations of the entities
they regulate to ensure that they observe
sound and prudent practices compliant with
the insurance laws, rules and regulations.
The powers of the insurance regulators are
broad which are defined in their respective
laws.
21
Areas of Study
(excerpts)
PHILIPPINES
SINGAPORE
VIETNAM
(Insurance Code of the
Philippines)
(Chapter 24: Insurance Law)
(Chapter 142: Insurance Act)
(Law on Insurance Business)
Insurance Commission
Monetary Authority of Singapore
Ministry of Finance
18
Establishment
of Specific
Funds by
Insurers and
Allocation of
Surplus
Under Section 17 of the Singapore
Insurance Act, every registered
insurer is required to establish and
maintain a separate insurance
fund for each class of insurance
business in relation to its
Singapore policies and off-shore
Payments made by life insurance policies respectively.
The security funds set up in
accordance with the Insurance
Code consists of all payments
made to the fund by insurance
companies authorized to do
business in the Philippines.
companies (Life Account) shall
be treated separately from
those
made
by
non-life
insurance companies (Non-Life
Account) and shall be held and
administered
by
the
Commissioner. The Life Account
shall be utilized exclusively for
disbursements of life insurance
companies, while the Non-Life
Account shall be utilized for the
disbursements
of
non-life
insurance companies (Section
366).
The Fund shall be used to pay
allowed claims against an
insurance company which are
unpaid by reason of insolvency.
The use of the term “off-shore
policy” in the Singapore Act is
equivalent to the term “foreign
policy” under the Malaysian Act
since both terms refer to policies
other than local policies.
All insurance enterprises and
insurance brokerage enterprises
shall establish a compulsory
reserve fund to be added to the
charter capital and to ensure
solvency to be derived annually
at a rate of 5% of after tax
profits.
The enterprises are free to
establish any additional voluntary
reserve funds from their after tax
profits. (Article 97)
22
Areas of
Study
(excerpts)
19
Reporting of
Financial
Documents
PHILIPPINES
SINGAPORE
VIETNAM
(Insurance Code of the
Philippines)
(Chapter 24: Insurance Law)
(Chapter 142: Insurance Act)
(Law on Insurance Business)
Insurance Commission
Monetary Authority of Singapore
Insurance
companies
must
terminate its calendar period on
the 31st of December annually.
It must submit its financial
report with a sworn statement
by the chief officer of the
insurance company (indicating
the financial condition and
methods of doing business of
insurance
companies
are
conducted) before the 30th of
April of next year (Section
223).
The registered insurer has to
submit audited accounts for each
accounting
period
to
the
Authority as per Sections 36(1)
and 36(3).
Ministry of Finance
In
Article
31
Decree
No.43/2001/ND-CP, the fiscal year of
insurance enterprises and insurance
brokerage
enterprises
shall
commence on the 1st of January and
end on 31st of December and for the
first year of operations, it will
All insurers registered under the commence from the date of the issue
Act in respect of life business are of the license and end on 31st of
required, once in a period of 12 December of the same year.
months, to have actuarial
investigations made by an
actuary
into
the
financial
condition of its life insurance
business and lodge with the
Authority the actuary’s report
pertaining to the said business
The Insurance Commissioner
(Section 37(1).
within 30 days after the
recipient of the annual reports Companies incorporated outside
must publish in two (2) national Singapore, the audit required is
newspapers
of
general only in relation to the business
circulation (1 in English and in for which an insurance fund is
under
the
Act
Filipino), a full synopsis or the maintained
approved financial statement of (Section 36(9).
the company (Section 49 of
Non-Life Insurance Act &
Section 45 of the Life
Insurance Act).
Article
32
of
Decree
No.
43/2001/ND-CP
requires
the
insurance enterprises to submit all
required regular and ad hoc financial
statements, statistics reports and
operational reports in accordance
with the provisions of the laws and
guidance of the Ministry of Finance
(MoF). It also requires that the annual
financial statements to be audited
and certified by legally-operated
independent auditing company in
Vietnam before submission to the
MoF.
Article
33
of
Decree
No.43/2001/ND-CP requires that the
insurance enterprises make public
their financial statements with 120
days of the end of the fiscal year.
23
Areas of
Study
(excerpts)
20
Alternative
Dispute
Resolution
(ADR)
PHILIPPINES
SINGAPORE
VIETNAM
(Insurance Code of the
Philippines)
(Chapter 24: Insurance Law)
(Chapter 142: Insurance Act)
(Law on Insurance Business)
Insurance Commission
Monetary Authority of Singapore
Ministry of Finance
The Insurance Dispute Resolution Organization
(IDRO) was set up by the insurance industry as an
alternative and independent channel for resolving
disputes. It acts as a one-stop service center to
insurance-related inquiries and complaints. It
replaces and embraces the functions of the
In addition, in respect of
Insurance Ombudsman Bureau and the Tribunal for
dispute resolution through Motor Third Party Property Damage Claims.
Arbitration laws allow
voluntary
arbitration
between parties to a
contract.
mediation, the Insurance
Commissioner has powers
to decide on matters up to
a
certain
amount.
However, this avenue is
seldom used.
There are no specific
provisions on Alternative
Dispute Resolutions in Law
of Insurance Business.
The board of IDRO comprises of representatives
from the Consumers’ Association of Singapore
(CASE), the Automobile Association of Singapore
(AAS), the General Insurance of Singapore (GIA)
and the Life Insurance Association of Singapore
(LIA) and chaired by a retired Supreme Court
Judge.
The limits of IDRO’s jurisdiction are as follows:
- Up to $100,000 Singapore Dollars for insurance
disputes between insured’s and insurers for both
life and general insurance matters
- Up to $50,000 Singapore Dollars for third party
claims
- Up to $10,000 Singapore Dollars for claims
relating to market conduct and service standards.
In the case of any dispute, insurance companies
are bound by IDRO’s findings whilst the consumer
is at liberty to pursue other resolution options at
their discretion.
24
Areas of
Study
21
PHILIPPINES
SINGAPORE
VIETNAM
(Insurance Code of the Philippines)
(Chapter 24: Insurance Law)
(Chapter 142: Insurance Act)
(Law on Insurance Business)
(excerpts)
Insurance Commission
Limitation
Period
Claims relating to bodily injuries
must be made within 6 months
from the date of the accident;
otherwise the claim will be
deemed waived.
Ministry of Finance
Monetary Authority of Singapore
The Insurance Code also provides
provisions for action on suit for
recovery of damage due to injury
to be brought with the Insurance
Commissioner or the Courts.
However, this action must be filled
within 1 year from denial of the
claim. (Section 384)
The Limitation Act (Chapter
163) provides that an action
shall not be brought after the
expiration of 3 years for such
claims.
Vehicle owners must make their
claims within 1 year from the
date of the accident.
Decision 23/2003/OB-BTC also
provides that the statute of
limitation for initiating lawsuits
regarding
the
insurance
compensation is 3 years from the
date the insurance enterprise
pays or refuses to pay the
indemnity.
There are statutory rules limiting the time within which civil actions must
be brought in respect for claims arising from death or personal injury.
However, it is apparent that periods stipulated vary based on the types of
claim and applicable jurisdiction.
25
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26