President Benigno Aquino 3rd has signed into law the bill amending the 38-year-old Insurance Code of the Philippines, a Malacañang official announced on Tuesday.
In a press conference, Palace deputy spokesman Abigail Valte said that Republic Act 10607, which raises capital requirements for insurers among other reforms, was signed by the President on August 15.
She cited that the formal title of the new law is: “An Act Strengthening the Insurance Industry Further Amending Presidential Decree No. 612 Otherwise Known as the Insurance Code as Amended by Presidential Decree Nos. 1141, 1280, 1455, 1460, 1814, and 1981 and Batas Pambansa Bilang 874 and for Other Purposes.”
Enacted on December 18, 1974, the Insurance Code or Republic Act 2427 created the Insurance Commission to regulate the life and non-life insurance sector.
Among key amendments in the Code include higher capitalization for insurers, a fixed term of six years for the Insurance Commissioner.
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
The law also requires the use of modern, international accounting standards in reporting and auditing financial reports of insurance firms.
It also added provisions on new products like bank assurance—the partnership between a bank and an insurance firm that allows sale of insurance products in the bank’s branches—and micro-insurance activities. CATHERINE S. VALENTE