TITLE 10

VARIABLE CONTRACTS
 Variable Contract
o It is any policy providing for benefits to vary so as to reflect investment results
of any segregated portfolio of investments, or of a designated separate
account, in which amounts received in connection with such contracts shall
have been placed and accounted for separately from other investments and
accounts.
o It is a form of life insurance contract under which the benefits vary with the
investment performance of the assets derived from the sale of those contracts.

 Distinguished from Life Insurance Contracts

o the benefits from life insurance contracts depend on an index, such as the
Consumer Price Index.

 Variable contracts may also provide benefits incidental thereto payable in fixed or variable
amounts, or both.
 It shall not be deemed to be a security as defined in The Securities Act or in the
Investment Company Act, nor subject to regulations under said Acts.

 Requirement for an insurance company to be authorized to deliver, sell or use any Variable
Contract:
o It must satisfy the Commissioner that its financial and general condition and its
methods of operations are not hazardous to the public or to its policy and contract
owners.

 The insurance company may in its discretion issue contracts providing a combination of
fixed amount and variable amount of benefits and for option lump-sum payment of
benefits.
 Every variable contract form delivered shall be subject to the prior approval of the
Commissioner.
 Variable contracts may be issued on the industrial life basis

TITLE 11
CLAIMS SETTLEMENT

 Claims Settlement – the indemnification of the loss suffered by the insured.

o The claimant may be:
 the insured / reinsured
 insurer who is entitled to subrogation
 third party who has a claim against the insured

 RULES

1. GR: No insurance company shall refuse to pay or settle claims arising under coverages
provided by its policies,

EXC: If there is just cause

2. No insurance company shall engage in unfair claim settlement practices.

3. WHAT CONSTITUTES 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.

4. If it is found, after notice and an opportunity to be heard, that an insurance company has
violated this section, each instance of noncompliance may be treated as a separate
violation of this section and shall be considered sufficient causes for the suspension or
revocation of the company’s certificate of authority.

 What is the time for payment of claims in Life Insurance?

It depends

1. For policies maturing upon the expiration of the term, the proceeds are immediately
payable to the insured. However, if they are payable in installments or as annuity, the
installments or annuities shall be paid as they become due.
2. For policies maturing by the death of the insured, the proceeds thereof shall be paid within
60 days after presentation of the claim and filing of the proof of death of the insured.

o NOTE: 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.

o NOTE: 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.

 What is the time for payment of losses or damage for Non-life Insurance?

It depends

1. 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 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;
2. HOWEVER, if such ascertainment is not made within 60 days after such receipt by the
insurer of the proof of loss, then the loss or damage shall be paid within 90 days after
such receipt.

o NOTE: 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.

 Must the Commissioner or the Court make a finding?

YES. 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
  What are the damages that may be awarded?
o Attorney’s fees
o Other expenses incurred by the insured by reason of such unreasonable denial or
withholding of payment
o Interest of twice the ceiling prescribed by the Monetary Board of the amount of the
claim due the insured
o The amount of the claim

 What other prohibitions are provided?

It shall be unlawful to:

(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 shall be punished by a fine not exceeding twice the amount claimed
or imprisonment of 2 years, or both, at the discretion of the court.

TITLE 12
EXAMINATION OF COMPANIES

 What are the powers of the Commissioner

a.) The Commissioner shall require every insurance company doing business in the
Philippines to keep its books, records, accounts and vouchers in such manner that he
or his authorized representatives may readily verify its annual statements and ascertain
whether the company is solvent and has complied with the provisions of this Code or the
circulars, instructions, rulings or decisions of the Commissioner.
b.) At least once a year and whenever he considers the public interest so demands, cause
an examination to be made into the affairs, financial condition and method of
business of every insurance company authorized to transact business in the Philippines
and of any other person, firm or corporation managing the affairs and/or property of such
insurance company.
c.) Require such companies to submit to the examiner all such books, papers and
securities
d.) Such examiner shall also have the power to examine the officers of such company
under oath touching its business and financial condition.

 Are Government-owned or -controlled corporations or entities engaged in social or private

insurance also subject to such examination?

YES, unless their respective charters otherwise provide.