INSURANCE COMPANIES

• Forerunners of Insurance in the Philippines
• Forerunners of modern insurance in the Philippines


  • Bayanihan System
  • Paluwagan System
  • Abuloy System
• Insurance was first introduced in the Philippines when Lloyd's of London appointed Stracham, Murray & Co., Inc. as its local representative

  March 1829
• The group of Russell and Sturgis was appointed by the Union Insurance Society of Canton to act as their insurance agents in Manila

  1839
• Life insurance was introduced in the Philippines when the Sun Life Assurance of Canada began doing business


  1898
• The first domestic non-life insurance company, the Yek Tong Lin Fire and Marine Insurance Company (now known as the Philippines First Insurance Company), was established


  June 8, 1906
• The first domestic life insurance company, the Insular Life Assurance Company, Ltd., was organized


  1910
• Law of Large Numbers


  A mathematical law which states that when the number of similar(homogenous) independent exposure units is increased, the relative accuracy of predictions about future outcomes (losses, in this case) is also increased
• Insurance


  • A social device which combines the risks of individuals into a group, using funds contributed by members of the group to pay for losses
  • A device for reducing risk by combining a sufficient number of exposure units to make their individual losses collectively predictable
  • A contract, which is called a policy, in which an individual or organization receives financial protection and reimbursement of damages from the insurer or the insurance company
• Insurer


  • The company or person who promises to reimburse
  • Every corporation, partnership, or association, duly authorized to transact insurance business as elsewhere provided in Insurance Code
• Insured (sometimes called the assured)


  The one who receives the payment, except in the case of life insurance, where payment goes to the beneficiary named in the life insurance contract
• Risk


  Uncertainty concerning loss
• Peril


  The cause of loss; a loss producing agent like fire, lightning, earthquake, collision, computer breakdown, typhoon, etc.
• Hazard


  Condition that tends to create or increase the chance of loss from a given peril
• Physical Hazard


  Objective characteristics that increase the chance of loss
• Moral Hazard


  Subjective characteristics of the Insured
• Morale Hazard


  Characterized by carelessness or indifference to loss because of insurance coverage
• Contract of Insurance


  An agreement whereby one undertakes for a consideration to indemnify another against loss, damage or liability arising from an unknown or contingent event
• Policy


  The written instrument in which a contract of insurance is set forth
• Premium


  The consideration paid by the insured—usually annually or semiannually—for the insurer's promise to reimburse
• Functions of Insurance Company


  • Provides Reliability
  • Provides Protection
  • Pools Risk
  • Fulfills Legal Requirements
  • Facilitates Capital Formation
• Insurance is regulated by various laws and regulations
• Regulatory Bodies and Legislative Guidance


  • Insurance Commissioner
  • Securities and Exchange Commission of the Philippines (SEC)
  • Bangko Sentral ng Pilipinas (BSP)
  • Anti-Money Laundering Council (AMLC)
  • Philippine Competition Commission (PCC)
• Principles of Insurance


  • Utmost Good Faith
  • Insurable Interest
  • Indemnity
  • Subrogation
  • Contribution
  • Proximate Cause
• Insurer


  Undertakes the responsibility of compensating the insured against any possible damage or loss that he may or may not suffer
• Life insurance is not a contract of indemnity
• Subrogation


  Once the compensation has been paid, the right of ownership of the property will shift from the insured to the insurer. So the insured will not be able to make a profit from the damaged property or sell it
• Contribution


  If there is more than one insurer, the insurer can ask the other insurers to contribute their share of the compensation. If the insured claims full insurance from one insurer, he loses his right to claim any amount from the other insurers
• Proximate Cause


  The property is insured only against the incidents that are mentioned in the policy. In case the loss is due to more than one such peril, the one that is most effective in causing the damage is the cause to be considered
• Types of Insurance


  • Public and Private Insurance
  • Types of Insurance for the Individual
  • Types of Business Insurance
• Public (or social) insurance


  Includes Social Security, Medicare, temporary disability insurance, and the like, funded through government plans
• Private insurance


  All types of coverage offered by private corporations or organizations
• Life Insurance


  Provides for your family or some other named beneficiaries on your death. Two general types are available: term insurance provides coverage only during the term of the policy and pays off only on the insured's death; whole-life insurance provides savings as well as insurance and can let the insured collect before death
• Health Insurance


  Covers the cost of hospitalization, visits to the doctor's office, and prescription medicines. Usually, the policy will contain a deductible amount; the insurer will not make payments until after the deductible amount has been reached
• Disability Insurance


  Pays a certain percentage of an employee's wages (or a fixed sum) weekly or monthly if the employee becomes unable to work through illness or an accident
• Homeowner's Insurance


  Provides insurance for damages or losses due to fire, theft, and other named perils. No policy routinely covers all perils. The homeowner must assess his needs by looking to the likely risks in his area—earthquake, flooding, and so on
• Automobile Insurance


  Covers liability for bodily injury and property damage, medical payments, damage to or loss of the car itself, and attorneys' fees in case of a lawsuit
• Personal Liability Insurance


  Covers many types of risks and can give coverage in excess of that provided by homeowner's and automobile insurance
• Workers' Compensation


  Almost every business must insure against injury to workers on the job. Some may do this through self-insurance—that is, by setting aside certain reserves for this contingency. Other businesses purchase workers' compensation policies, available through commercial insurers
• Property Insurance


  Covers damage or loss to a company's own property or to property of others stored on the premises