DEFINICIONES PARA EVENTOS DE ESTADO ESTACIONARIO 4

Claims settlement is the indemnification of the loss suffered by the insured. The claimant may be the insured or reinsured, the insurer who is entitled to subrogation, or a third party who has a claim against the insured Where a policy gives the insurer the control of the decision to settle claim or litigate it, the insurer nevertheless is required to observe a certain measure of consideration for the interest of the insured.

In case of litigation, it is the duty of the Commissioner or the Court to determine whether the claim has been unreasonably denied or withheld. Failure to pay any such claim within the time prescribed shall be considered prima facie evidence of unreasonable delay in payment. [Sec. 250]

Claims Life insurance Non-life insurance

Maturity Either:

(a) Upon death of the person insured; (b) Upon his surviving a specific

period; or

(c) Otherwise contingently on the

continuance or cessation of life

[Sec 180]

(1) Upon happening of event insured against; and

(2) Event must occur within the period specified in policy, otherwise insurer has no liability

Delivery of proceeds

General rule:The proceeds should be delivered immediately upon maturity of policy.

Exceptions:

1. If payable ininstallments or as an

annuity, when such installments

or annuities become due;

2. If maturity is upon death, within 60 days after presentation of claim and filing of proof of death of insured. [Sec. 248]

(1) Within 30 days after:

(a) Proof of loss is received by insurer; and

(b) Ascertainment of loss or damage is made either by agreement between the insured and insurer or by arbitration

(2) If ascertainment is not made within 60 days after such receipt by insurer of proof of loss, then loss or damage shall be paid within 90 days after such receipt. [Sec. 249]

Effect of refusal or failure to pay claim within time prescribed

1. This entitles the beneficiary to collect interest on the proceeds of policy for the duration of the delay at rate of twice the ceiling prescribed by the monetary board (unless refusal to pay is based on ground that claim is fraudulent)

2. In case damages are awarded, this includes attorney’s fees and other expenses incurred due to delay (plus the interest) [Sec. 248 and 249]

C.1. UNFAIR CLAIMS SETTLEMENT; SANCTIONS

Sec. 247. No insurance company doing

business in the Philippines shall refuse, without just cause, to pay or settle claims arising under coverages provided by its policies, nor shall any such company engage in unfair claim settlement practices.

Any of the following acts by an insurance company, if committed without just cause and

performed with such frequency as to indicate a general business practice, shall constitute

unfair claim settlement practices:

Knowingly misrepresenting to claimants pertinent facts or policy provisions relating to coverage at issue;

Failing to acknowledge with reasonable promptness pertinent communications with respect to claims arising under its policies; Failing to adopt and implement reasonable standards for the prompt investigation of claims arising under its policies;

Not attempting in good faith to effectuate prompt, fair and equitable settlement of claims submitted in which liability has become reasonably clear; or

Compelling policyholders to institute suits to recover amounts due under its policies by offering without justifiable reason substantially less than the amounts ultimately recovered in suits brought by them.

Evidence as to numbers and types of valid and justifiable complaints to the Commissioner against an insurance company, and the Commissioner’s complaint experience with other insurance companies writing similar lines of insurance shall be admissible in evidence in an administrative or judicial proceeding for the purpose of determining whether unfair claim settlement practices have been committed.

If it is found, after notice and an opportunity to be heard, that an insurance company has violated this section, each instance of noncompliance may be treated as a separate violation and shall be considered sufficient cause for the suspension or revocation of the company’s certificate of authority

Sec. 247 lists the grounds which are sufficient cause for the suspension or revocation of the insurer’s certificate of authority [Sec. 247(c)]. C.2. PRESCRIPTION OF ACTION

In the absence of an express stipulation in the policy, it being based on a written contract, the action prescribes in ten years [Article 1144,

Civil Code].

However, the parties may validly agree on a shorter period provided it is not less than one year from the time the cause of action accrues [Sec 63].

In compulsory motor vehicle insurance, the action prescribes in one year from the denial of the claim [Sec. 397]

C.3. SUBROGATION

Subrogation is a process of legal substitution. The insurer, after paying the amount covered by the insurance policy, steps into the shoes of the insured and avails himself of the latter's rights that exist against the wrongdoer at the time of loss.

The insurer becomes entitled to recover from the wrongdoer the amount of the loss it may have paid to the insured.

The Right of Subrogation stems from Art. 2207 of the Civil Code.

Note:Subrogation applies only to property insurance and non-life insurance.

C.3.A. RIGHTS TRANSFERRED

The subrogee-insurer cannot acquire any claim, Security, or remedy the subrogor did not have (or a greater claim than the original insured). In other words, a subrogee cannot succeed to a right not possessed by the subrogor. A subrogee can recover only if the insured likewise could have recovered. [Sulpicio Lines, Inc. v. First Lepanto-Taisho Ins.

Corp. G.R. No. 140349 (2005)]

The insured can no longer recover from the offended party what was paid to him by the insurer but he can recover any deficiency if the damages suffered are more than what

was paid. The deficiency is not covered by the right of subrogation.

The insurer must present the policy as evidence to determine the extent of its coverage. [Wallem Phil. Shipping v. Prudential

GuaranteeG.R. No. 152158 (2003)]

C.3.B. WHEN THERE IS NO RIGHT OF SUBROGATION

(1) Where the insured by his own act releases the wrongdoer or third party liable for the loss or damage;

(2) Where the insurer pays the insured the value of the loss without notifying the carrier who has in good faith settled the insured’s claim for loss;

(3) Where the insurer pays the insured for a loss or risk not covered by the policy [Pan

Malayan Ins. Co. v. CA, G.R. No.

81026(1990)]; (4) In life insurance;

(5) For recovery of loss in excess of insurance coverage [De Leon (2014)].

The right of subrogation is not dependent upon, nor does it grow out of, any privity of contract or upon written assignment of claim. It accrues simply upon payment of the insurance claim by the insurer [Pan Malayan

Ins. Co v. CA, G.R. No. 81026 (1990)].

Since the insurer can be subrogated to only such rights as the insured may have, should the insured, after receiving payment from the insurer, release the wrongdoer who caused the loss, the insurer loses his rights against the latter. But in such a case, the insurer will be entitled to recover from the insured whatever it has paid to the latter, unless the release was made with the consent of the insurer [Manila Mahogany v. CA G.R. No. L- 52576 (1987)].

IX. Insurance

Commissioner

A. JURISDICTION AND ADJUDICATORY