Mr. Insurance

Court stops GSIS take over of CTPL insurance

insurance — Mon, 28 Jul 2008 05:00:00 +0000

The Mandaluyong Regional Court issued a 20-day temporary restraining order against GSIS from implementing its plan to take over the issuance of CTPL insurance from private insurance companies. The court will study the merits of a petition filed by Ms. Belinda Martezano, an insurance agent, to stop the GSIS from monopolizing the CTPL business in the country.

GSIS move, with the approval of the DOTC and Insurance Commission, is designed to stop the proliferation of fake CTPL insurance policies. However, it would affect the income of the private insurance companies and their agents and brokers.

Read the news:

Court stops GSIS car insurance plan
By Michelle Remo
Philippine Daily Inquirer
First Posted 10:13am (Mla time) 07/26/2008

Compulsory Third Party Liability Insurance

insurance — Thu, 24 Jul 2008 04:57:00 +0000

The fight over who should write the CTPL insurance is not yet over. What's the controversy, in the first place?

The law compels the motor vehicle owner to procure a valid Third Party Liability Insurance and present the insurance policy upon filing of application as a requirement in the registration with the Land Transportation Office (LTO). However, there are unscrupulous entities or persons who are issuing fake insurance policies. To curb this malpractice, several systems, procedures have been devised and implemented. But these systems and procedures were no match to the issuers of fake insurance policies.

And now, another solution is being offered - the Government Service Insurance System (GSIS) shall monopolize the issuance of the CTPL insurance policies. The private insurance companies are decrying this solution.

First, it's COMPULSORY to procure a third party liability insurance. Now, it would become COMPULSORY to procure it from GSIS only.

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Mr. Honesto General wrote a column entitled: "CTPL: Cure worse than the disease" in the Philippine Daily Inquirer. He first mentioned the history of CTPL; then his opinion. I am encouraging you to read it here to better understand the CTPL.

The Principle of Subrogation

insurance — Mon, 16 Jun 2008 05:00:00 +0000

The aggrieved party has the legal right to recover from the offending party. However, if the aggrieved party has insurance on his property, claimed from and indemnified by the insurance company, the legal right to recover is transferred to the insurance company. This is called “subrogation”. Without “subrogation” the insured can still recover from the offending party; thus he could profit from his misfortune.

Once the insurance company indemnified the insured, the insured will sign a document subrogating the right to recover to the insurance company.

The principle of subrogation is applicable to contracts of indemnity only.

Trade Credit Insurance

insurance — Mon, 02 Jun 2008 17:00:00 +0000

Last Friday, I attended the “Briefing / Seminar on Credit Insurance” conducted by Philexim and COFACE. And, I’d like to share what I’ve learned.

Most export transactions now use an “Open Account” as the term of payment over “advance payment”, “cash on delivery”, and “consignment”. An “Open Account” is a payment of international trade transactions, in which:

The seller ships the goods and forwards the documents directly to the buyer
The buyer clears the goods upon arrival
The buyer arranges for payment.

The seller loses control of the goods as soon as they are dispatched, because he/she has to trust that the buyer will remit the funds.

Exporters should extend this type of payment to importers, whom they know and trust. They must also be comfortable with the commercial and country risks associated with the transaction. However, the risk of non-payment or default still exists. And, the exporter must protect his account receivables. He can do this through Trade Credit Insurance (TCI).

TCI covers non-payment of account receivables attributable to the following:

    1.   Buyer (Credit)
            a.   Insolvency
            b.   Protracted default

    2.   Country in which it operates in (political)
            a.   Government Moratorium
            b.   Non-transfer of Risks
            c.   Cancellation of Import License
            d.   Occurrence of War or Revolution

The following are not covered:

    1.   Buyer (Credit)
            a.   Non Acceptance of Goods
            b.   Trade Dispute

2. Country in which it operates in (political)
a. Devaluation or Depreciation of Currencies

If you are dealing with an “Open Account” payment system, it is advisable to cover it with Trade Credit Insurance. It is an effective credit management tool in time of uncertainties.

The Principle of Indemnity

insurance — Mon, 26 May 2008 05:00:00 +0000

Indemnity means the restoration of financial position of the insured after the loss as he enjoyed immediately before the loss. It also means an exact financial compensation. However, the indemnity payable should not exceed the insurable interest or the insured amount, whichever is lesser, at the time of the loss. No one should profit under his insurance policy as a result of his/her misfortune.Indemnity is not applicable to life and personal accident insurance contracts. The reason being it is impossible to provide exact financial compensation for loss of life or limb.

The insurer has the option to provide indemnity in the form of cash, replacement, repair or reinstatement to discourage fraud or suspicious claims.

As defined above, indemnity is the exact compensation. However, it may be reduced due to actual sum insured, insufficient sum insured and policy deductibles. Also, the salvage shall be considered in determining the indemnity.

Look of the Year Contest

insurance — Wed, 21 May 2008 09:00:00 +0000

There is a unique beauty contest that is going on over the web for the young and beautiful – the Look Of The Year Contest.

Anybody who has the winning looks, anywhere you are in the world, can join this exciting contest. Joining is easy as walking in the park. Simply submit your most beautiful pictures to http://www.lookoftheyear.com. And the judges who will rate your pictures are the millions of visitors of LookOfTheYear.com.

We know that there’s only one winner per category. But, even if you would not end up as one of winners, this is a great opportunity to expose yourself, be discovered, and become a famous model.

Join now! The four categories are:

Girls 14-19
Women 19+
Boys 14-19
Men 19+

The Principle of Utmost Good Faith

insurance — Mon, 12 May 2008 05:00:00 +0000

Utmost Good Faith means that each party to a proposed insurance contract is legally obliged to reveal to the other all information and materials facts, which would influence the other’s decision to enter into the contract, whether such information is requested or not.

Concealment and Misrepresentation.

Concealment is the intentional failure to reveal a material fact, which would influence a prudent underwriter in deciding whether to accept or reject a risk and what rate to charge and what conditions to impose.

Misrepresentation is the giving of false or misleading information on the material fact.

Concealment and/or misrepresentation gives the aggrieved party the right to avoid the contract.

The principle of Insurable Interest

insurance — Mon, 31 Mar 2008 05:00:00 +0000

Insurable Interest is very important in insurance. Without insurable interest you cannot insure a property or life. Even you were able to insure a property or life sans the insurable interest, it will be tested in the event of claim. If it is proven that an insured or assured has no insurable interest, he could not claim from the insurance.

You have insurable interest on the property or life, if in the event of loss or death, it will cause you direct financial loss.

Examples of who have Insurable Interest.

In property, the owners: authorized agents, administrators & executors, husband and wife (in each other's property), mortgagors & mortgagees.
In the lives of people: husband and wife, creditors and debtors, partners in a partnership business, corporations in its key personnel.
In liability: any person in any potential liability he may incur.

The basic insurance principles

insurance — Mon, 25 Feb 2008 05:00:00 +0000

So you already insured your property and are thinking that if something bad happened to your property, your insurer would pay you for the damages or replace the property insured. The answer is yes, provided, the following basic insurance principles are present.

The principle of Insurable Interest;
The principle of Utmost Good Faith;
The principle of Indemnity;
The principle of Subrogation;
The principle of Contribution;
The principle of Proximate Cause.

We shall discuss in details these principles one by one.

Insurance terms

insurance — Mon, 28 Jan 2008 05:00:00 +0000

To fully understand insurance, let us take a look at the meanings of the following basic terms, which you would encounter from time to time.

“Insurance” - Insurance is a CONTRACT or arrangement between two parties, called INSURED and INSURER. The Insurer, in return for a financial consideration called the PREMIUM agrees and undertakes to INDEMNIFY the Insured against LOSS, DAMAGE to the property insured or LIABILITY that may happen during an agreed and specified PERIOD of time, which is PROXIMATELY CAUSED by a PERIL insured against.

“Peril” - It is a CAUSE of loss, damage or liability, such as fire, earthquake, flood, etc.

“Hazard” - It is a CONDITION that tends to create or increase the CHANCE of loss. There are two types of hazards:

Physical Hazard – The characteristics of the subject matter of insurance that make it vulnerable to loss.
Moral Hazard – The honesty or integrity of the owner of the property insured or to be insured.

“Risk” - It is the PROBABILITY or chance that a loss would occur. RISK is also used to refer to the PERSON or property insured to be insured. It is also used interchangeably with “Peril”. When we refer to a subject matter as “risky”, it means that the probability of loss is HIGH.