ic requirements on mbas,...

IC REQUIREMENTS

ON MBAS,

MICROINSURANCE

BY: ESTER P. ABRAZADO

www.insurance.gov.ph

Legal Framework : Insurance Code

Regulator : Insurance Commission (IC)

Mandate :

1. To ensure the solvency of the insurance companies and MBAs so that all legitimate claims of the insuring public are met promptly and equitably.

2. To ensure that adequate insurance protection is available to the public at a fair and reasonable price.


Insurance Commission as the Regulator

• Provisions of the Amended Insurance Code Sections 187-188 microinsurance

Sections 403-423 MBAs

• Circulars issued Circular Letter No. 2015-12A

Circular Letter No. 2014-41

Circular Letter 6-2011


Insurance Memorandum Circular 1-2010

Joint Memorandum Circular 3-2010

Joint Memorandum Circular 1-2010


TO : All Mutual Benefit Associations (MBAs) Authorized to Do Business in the Philippines

SUBJECT : Filing of 2014 Annual Statements

In connection with the filing of the 2014 Annual Statements, the following guidelines are hereby issued:

1. The yellow Annual Statement (3 sets) the financial condition of MBA as of December 31,2014 shall be signed and

sworn to by the president, chief operating officer/general manager, secretary, treasurer, actuary and chief accountant and

shall be on legal size bond paper (8112 x 14 inches), using either the Times New Roman font size #12 or Arial font size

#10;

2. The Annual Statement should be "Soft Cover Binding", permanent adhesive;

3. Annex "A" is the updated list of the required documents and other schedules which shall form part as attachments in the

submission of Annual Statements and must be submitted in a separate folder;

4. The exact formats, columnar headings and footnote instructions found in every page of the blank forms of the prescribed

Annual Statement including those required formats attached to Annex "A" shall be strictly observed,

5. Any Annual Statement not in accordance with the required format and with missing data/information and incomplete

attachments shall not be accepted.

Please file your 2014 Annual Statements on or before April 30, 2015 to avoid penalty.

CIRCULAR LETTER NO. 2015-12ADated March 19, 2015


TO : ALL NEW AND EXISTING MUTUAL BENEFITS ASSOCIATIONS (MBAs)DOING BUSINESS lN THE PHILIPPINES

SUBJECT : STANDARD CHART OF ACCOUNTS (SCA) FOR MBAs

ln line with the requirements of SRC Rule 68, Section 189 of The Amended lnsurance Code, andcurrent accounting standards in the Philippines, a revised SCA for MBAs are hereby issued to bemaintained in the MBAs‘ books.

The SCA for MBAs will list a uniform system of account numbers categorized based on MBAs'revenue, expenses, assets, liabilities and fund value for similar transactions and events, incompliance with the latest Philippine Accounting Standards (PAS) and Philippine FinancialReporting Standards (PFRS).

CIRCULAR LETTER NO. 2014-41Dated September 25, 2014


Account Titles are presented in the SCA for MBAs according to their economic characteristicsand elements of financial statements such as assets, liabilities, fund balance, revenues,expenses and other comprehensive revenues. Each element is assigned a unique accountnumber as presented in Annex A.

Some of the account classifications are further classified or have sub-classifications. Thedetailed descriptions of the accounts are discussed in Annex A and a pro-forma FinancialStatements in Annex B.

The SCA for MBAs will be subjected for review once every three (3) years to assess itscompliance with the PAS/PFRS and/or other applicable regulations and standards. This CL No.2014-41 shall take effect immediately and will be used in the financial statement for calendaryear 2014. Signed this 25th day of September 2014.

The SCA for MBAs aims to fulfill the following objectives:

1) To establish uniform, comprehensive, minimum chart of accounts to improve financial data

collection,

reporting, accuracy and comparability;

2) To meet both the internal and external reporting requirements;

3) To ensure that MBAs comply with the generally accepted accounting principles (PAS/PFRS);

4) To allow for timely and accurate recording of financial transactions;

5) To allow for logical framework that can be used to determine where the funds are allocated

and used in compliance with the requirements of The Amended lnsurance Code; and

6) To provide comprehensive, full disclosure of the Financial Position of the MBA to its members

and regulators.


Circulars issued on Microinsurance

IMC 1-2010

• Defines the various regulations for provision of microinsuranceproducts and services. The circular also contains the features of a life and a non-life microinsurance product

Joint Memorandum Circulars 1 to 3

• Issued jointly by the IC, SEC and CDA

• Defines government policy on informal insurance activities

• Provides guidelines on the treatment of funds for informal insurance activities

• Extends the deadline for the termination of insurance activities from December 31, 2010 to December 31, 2011


Circulars issued on Microinsurance


• Adopts the Performance Standards as the microinsurance industry benchmarks in assessing and evaluating the operations of all microinsurance providers beginning calendar year 2011


• Provides the guidelines for the approval of training programs and licensing of microinsurance agents


On Informal Insurance(JMC 1-2010)

WITH REGULATION

• Contributions/premiums are regularly collected prior to the occurrence of a contingent event; and

• Guaranteed benefits are provided upon the occurrence of a contingent event.

NO REGULATION

• Individuals voluntarily pledge and contribute a certain amount of money to a fund

• Benefits are not pre-determined but are contingent to the amounts collected.


What should be done by unregulated entities

(JMC 1-2010 and JMC 3-2010)

Formal Arrangements with authorized insurance providers

Organize into an insurance provider and seek appropriate authority from the Insurance Commission

Terminate informal insurance or insurance –like activities by December 31, 2011 (JMC 3-2010)


Formal arrangements

• Partnership with commercial insurance companies

• Membership in an existing:

• Mutual Benefit Association

• Cooperative insurance provider

What should be done by unregulated entities

(JMC 1-2010)


Sanctions and penalties for informal insurance

(JMC 1-2010)

Commencement of revocation proceedings against the primary franchise of the erring entities; or

Imposition of other administrative sanctions in accordance with the “Corporation Code of the Philippines” or the “Cooperative Code of the Philippines”

• without prejudice to the filing of criminal charges against the individuals responsible for the violation.


Section 408 of the Amended Insurance Code

“A mutual benefit association shall only maintain free and unassigned surplusof not more than twenty percent (20%) of its total liabilities as verified bythe Commissioner. Any amount in excess shall be returned to themembers by way of dividends, enhancing the equity value or providingbenefits in kind and other relevant services. In addition, subject to theapproval of the Commissioner, a mutual benefit association may allocate aportion for capacity building and research and development such asdeveloping new products and services, upgrading and improving operatingsystems and equipment and continuing member education.”


Thank you.

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