"CHAPTER III"THE BUSINESS OF

INSURANCE
"TITLE 7"REINSURANCE TRANSACTIONS
"Section 222. An insurance company doing
business in the Philippines may accept
reinsurances only of such risks, and retain
risk thereon within such limits, as it is
otherwise authorized to insure.
"Section 223. No insurance company doing
business in the Philippines shall cede all or
part of any risks situated in the Philippines
by way of reinsurance directly to any
foreign insurer not authorized to do
business in the Philippines unless such
foreign insurer or, if the services of a
nonresident broker are utilized, such
nonresident broker is represented in the
Philippines by a resident agent duly
registered with the Commissioner as
required in this Code.
"The resident agent of such unauthorized
foreign insurer or nonresident broker shall
immediately upon registration furnish the
Commissioner with the annual statement of
such insurer, or of such company or
companies where such broker may place
Philippine business as of the year preceding
such registration, and annually thereafter
as soon as available.
"Section 224. All insurance companies, both
life and non-life, authorized to do business
in the Philippines shall cede their excess
risks
to
other
companies
similarly
authorized to do business in the Philippines
in
such
amounts
and
under such
arrangements as would be consistent with
sound underwriting practices before they
enter into reinsurance arrangements with
unauthorized foreign insurers.
"Section 225. Any insurance company doing
business in the Philippines desiring to cede
their excess risks to foreign insurance or
reinsurance companies not authorized to
transact business in the Philippines may do
so under such terms and conditions which
the Commissioner may prescribe.
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"Should any reinsurance agreement be for

any reason cancelled or terminated, the
ceding company concerned shall inform the
Commissioner
in
writing
of
such
cancellation or termination within thirty (30)
days from the date of such cancellation or
termination or from the date notice or
information
of
such
cancellation
or
termination is received by such company as
the case may be.
"Section 226. Every insurance company
authorized to do business in the Philippines
shall report to the Commissioner on forms
prescribed by him the particulars of
reinsurance treaties or any new treaties or
changes in existing treaties within three (3)
months from their effectivity.
"Section 227. No credit shall be allowed as
an admitted asset or as a deduction from
liability, to any ceding insurer for
reinsurance made, ceded, renewed, or
otherwise becoming effective after January
1, 1975, unless the reinsurance shall be
payable by the assuming insurer on the
basis of the liability of the ceding insurer
under the contract or contracts reinsured
without
diminution
because
of
the
insolvency of the ceding insurer nor unless
under the contract or contracts of
reinsurance
the
liability
for
such
reinsurance is assumed by the assuming
insurer or insurers as of the same effective
date; nor unless the reinsurance agreement
provides that payments by the assuming
insurer shall be made directly to the ceding
insurer or to its liquidator, receiver, or
statutory successor except:
"(a) Where the contract specifically
provides another payee of such reinsurance
in the event of the insolvency of the ceding
insurer; and
"(b) Where the assuming insurer with the
consent of the direct insured or insureds
has assumed such policy obligations of the
ceding insurer as direct obligations of the
assuming insurer to the payees under such
policies and in substitution for the
obligations of the ceding insurer to such
payees.
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"Section 228. No life insurance company

doing business in the Philippines shall
reinsure its whole risk on any individual life
or joint lives, or substantially all of its
insurance in force, without having first
obtained the written permission of the
Commissioner.
"TITLE 11"CLAIMS SETTLEMENT
"Section 247. (a) No insurance company
doing business in the Philippines shall
refuse, without just cause, to pay or settle
claims arising under coverages provided by
its policies, nor shall any such company
engage in unfair claim settlement practices.
Any of the following acts by an insurance
company, if committed without just cause
and performed with such frequency as to
indicate a general business practice, shall
constitute unfair claim settlement practices:
"(1) Knowingly misrepresenting to claimants
pertinent facts or policy provisions relating
to coverage at issue;
"(2) Failing to acknowledge with reasonable
promptness pertinent communications with
respect to claims arising under its policies;
"(3) Failing to adopt and implement
reasonable standards for the prompt
investigation of claims arising under its
policies;
"(4) Not attempting in good faith to
effectuate prompt, fair and equitable
settlement of claims submitted in which
liability has become reasonably clear; or
"(5) Compelling policyholders to institute
suits to recover amounts due under its
policies by offering without justifiable
reason substantially less than the amounts
ultimately recovered in suits brought by
them.
"(b) Evidence as to numbers and types of
valid and justifiable complaints to the
Commissioner
against
an
insurance
company,
and
the
Commissioners
complaint experience with other insurance
companies writing similar lines of insurance
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shall be admissible in evidence in an

administrative
or
judicial
proceeding
brought under this section.
"(c) If it is found, after notice and an
opportunity to be heard, that an insurance
company has violated this section, each
instance of noncompliance with paragraph
(a) may be treated as a separate violation
of this section and shall be considered
sufficient cause for the suspension or
revocation of the companys certificate of
authority.
"Section 248. The proceeds of a life
insurance policy shall be paid immediately
upon maturity of the policy, unless such
proceeds are made payable in installments
or as an annuity, in which case the
installments, or annuities shall be paid as
they become due: Provided, however, That
in the case of a policy maturing by the
death of the insured, the proceeds thereof
shall be paid within sixty (60) days after
presentation of the claim and filing of the
proof of death of the insured. Refusal or
failure to pay the claim within the time
prescribed herein will entitle the beneficiary
to collect interest on the proceeds of the
policy for the duration of the delay at the
rate of twice the ceiling prescribed by the
Monetary Board, unless such failure or
refusal to pay is based on the ground that
the claim is fraudulent.
"The proceeds of the policy maturing by the
death of the insured payable to the
beneficiary shall include the discounted
value of all premiums paid in advance of
their due dates, but are not due and
payable at maturity.
"Section 249. The amount of any loss or
damage for which an insurer may be liable,
under any policy other than life insurance
policy, shall be paid within thirty (30) days
after proof of loss is received by the insurer
and ascertainment of the loss or damage is
made either by agreement between the
insured and the insurer or by arbitration;
but if such ascertainment is not had or
made within sixty (60) days after such
receipt by the insurer of the proof of loss,
then the loss or damage shall be paid within
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ninety (90) days after such receipt. Refusal

or failure to pay the loss or damage within
the time prescribed herein will entitle the
assured to collect interest on the proceeds
of the policy for the duration of the delay at
the rate of twice the ceiling prescribed by
the Monetary Board, unless such failure or
refusal to pay is based on the ground that
the claim is fraudulent.

claim due the insured, from the date

following the time prescribed in Section 248
or in Section 249, as the case may be, until
the claim is fully satisfied: Provided, That
failure to pay any such claim within the
time prescribed in said sections shall be
considered prima facie evidence
of
unreasonable delay in payment.
"Section 251. It is unlawful to:

"Section 250. In case of any litigation for

the enforcement of any policy or contract of
insurance, it shall be the duty of the
Commissioner or the Court, as the case
may be, to make a finding as to whether
the payment of the claim of the insured has
been unreasonably denied or withheld; and
in the affirmative case, the insurance
company shall be adjudged to pay damages
which shall consist of attorneys fees and
other expenses incurred by the insured
person by reason of such unreasonable
denial or withholding of payment plus
interest of twice the ceiling prescribed by
the Monetary Board of the amount of the

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"(a) Present or cause to be presented any

fraudulent claim for the payment of a loss
under a contract of insurance; and
"(b) Fraudulently prepare, make or
subscribe any writing with intent to present
or use the same, or to allow it to be
presented in support of any such claim. Any
person who violates this section shall be
punished by a fine not exceeding twice the
amount claimed or imprisonment of two (2)
years, or both, at the discretion of the
court.

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