Rules and Regulations on Reinsurance Transactions
Insurance Circular Letter No. 012-09, issued on March 10, 2009, establishes revised regulations for life reinsurance transactions in the Philippines under the authority of the Insurance Commission. Key provisions include a minimum retention requirement for life insurance companies equal to half a percent of their latest verified stockholders' equity, and restrictions on reinsurance placements abroad for certain risks—specifically, limits on amounts for standard and substandard lives. Reinsurance treaties must be on a yearly renewable term basis, and the Insurance Commission must approve facultative reinsurance placements. Additionally, companies may seek catastrophe or stop loss coverage abroad under specific circumstances. All previous inconsistent circulars and orders are revoked.
Quick Answers
- What is Rules and Regulations on Reinsurance Transactions about?
- Insurance Circular Letter No. 012-09, issued on March 10, 2009, establishes revised regulations for life reinsurance transactions in the Philippines under the authority of the Insurance Commission. Key provisions include a minimum retention requirement for life insurance companies equal to half a percent of their latest verified stockholders' equity, and restrictions on reinsurance placements abroad for certain risks—specifically, limits on amounts for standard and substandard lives. Reinsurance treaties must be on a yearly renewable term basis, and the Insurance Commission must approve facultative reinsurance placements. Additionally, companies may seek catastrophe or stop loss coverage abroad under specific circumstances. All previous inconsistent circulars and orders are revoked.
- What type of law is Insurance Circular Letter No. 012-09?
- Rules and Regulations on Reinsurance Transactions (Insurance Circular Letter No. 012-09) is a Philippine Other Rules and Procedures enacted by the Congress of the Philippines.
- When was Rules and Regulations on Reinsurance Transactions enacted?
- Rules and Regulations on Reinsurance Transactions (Insurance Circular Letter No. 012-09) was enacted on Mar 10, 2009.
- What is the citation for Rules and Regulations on Reinsurance Transactions?
- Rules and Regulations on Reinsurance Transactions, Insurance Circular Letter No. 012-09, Mar 10, 2009 (Philippines)
Law Information
- Reference Number
- Insurance Circular Letter No. 012-09
- Date Enacted
- Category
- Other Rules and Procedures
- Subcategory
- Insurance
- Jurisdiction
- Philippines
- Enacting Body
- Congress of the Philippines
Full Law Text
March 10, 2009
INSURANCE CIRCULAR LETTER NO. 012-09
| TO | : | All Life Insurance Companies and Reinsurance Brokers Authorized to do Business in the Philippines |
| SUBJECT | : | Rules and Regulations on Reinsurance Transactions |
By virtue of the powers vested in the Insurance Commission under the provision of Section 414 of the Insurance Code, the following revised rules and regulations governing life reinsurance transactions in the Philippines are hereby promulgated:
1. The retention of a life insurance company on any one standard life insured shall not be less than the amount equal to one-half (1/2) of one percent of the latest verified stockholders equity.
2. The minimum retention on substandard lives shall be graded downwards from standard in accordance with sound underwriting practice. The schedules of retention limits shall be submitted to the Insurance Commission prior to its adoption in any reinsurance agreement.
3. No reinsurance shall be placed abroad where the amount of risk is Three Million Pesos (P3.0M or less), per life standard risk, graded down for substandard lives.
4. No reinsurance shall likewise be placed abroad on accident riders where the accident risk does not exceed One Million Five Hundred Thousand Pesos (P1.5M) per standard risk.
5. Reinsurance treaties abroad shall be on the yearly renewable term plan (amount of risk) only. Renewal of existing treaties shall be on a year to year basis and shall contain a provision for recapture of previously ceded business. To protect the company against unusual number of claims as a result of jumbo policies issued, the company may avail itself of the catastrophe or stop loss cover abroad.
6. Reinsurance abroad on other life insurance riders, group insurance and all other life insurance business may be made only after it has been shown by the ceding company that such risk cannot be absorbed by the Philippine market.
Likewise, facultative reinsurance placements are subject to prior approval by the Insurance Commission.
All circulars and orders inconsistent herewith are hereby revoked.
(SGD.) EDUARDO T. MALINISInsurance Commissioner
Cite This Law
Rules and Regulations on Reinsurance Transactions, Insurance Circular Letter No. 012-09, Mar 10, 2009 (Philippines)
Rules and Regulations on Reinsurance Transactions, Insurance Circular Letter No. 012-09 (Phil. 2009)
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