Philippinies

Principal Legislation

The Philippines regulates its insurance and reinsurance sector under the Insurance Code (Presidential Decree No. 1460 of 1978), supported by several key statutory provisions:

• Article 1270 (Presidential Decree No. 1270) requires local insurers to offer 10% of outward treaties to the state-owned National Reinsurance Corporation of the Philippines (Nat Re), which can accept or decline the placement.
• Section 218 mandates that both life and non‑life insurers must cede excess risk within the domestic market before accessing overseas reinsurance capacity.
• Section 219 stipulates that facultative reinsurance placed abroad must be justified by proof of local market incapacity and requires approval from the Insurance Commissioner.
• Republic Act No. 10607 amended the Insurance Code, introducing incremental increases in minimum capital requirements: domestic life and non-life insurers must reach PHP 1 billion paid-up capital by end‐2022, as outlined in Section 194.
• Foreign insurers must maintain at least PHP 1 billion in unimpaired capital and hold restricted investments in approved securities as per Sections 197 and 204–212. All insurers must also comply with risk-based solvency requirements issued by the regulator.
• Department Order No. 15‑2012, still in force, sets minimum capitalization thresholds, aligning with the capital increments mandated under RA 10607.
• Circular Letter No. 2025‑09 consolidates previous guidance on investment rules, prescribing prudential limits on how insurers and reinsurers national and mutual benefit associations should allocate policyholder funds.

Supervision

The Insurance Commission (IC) regulates all life and non-life insurers in the Philippines under the Department of Finance. It is responsible for licensing, solvency oversight, market conduct, and consumer protection.

Two key industry associations support market development:

• PIRA represents non-life insurers and reinsurers.
• PLIA represents licensed life insurers.

Recent developments include Circular Letter No. 2025-09, which modernizes investment rules, and advisories promoting inclusive insurance products such as gender-focused and reproductive health coverage.

Admitted / Non-Admitted

Non-admitted insurance is not permitted in the Philippines unless special permission is granted by the Insurance Commission (IC). Insurance for risks situated within the country must be placed with locally licensed insurers.

Exceptions:

• Marine cargo imports and exports may be covered by non-admitted insurers if permitted by the terms of trade (e.g. CIF, FOB) applicable to the shipment.
• Risks located outside the Philippines may be insured by non-admitted insurers if the insured interest is not physically situated in the country, even if owned by a Philippine entity.

Compulsory Classes

• Motor third party bodily injury.
• Personal accident (PA) for passengers of public land transportation operators and operators of ferries.
• Workers’ compensation (state scheme).
• Professional indemnity for insurance and reinsurance brokers.
• Public liability covers for businesses and condominiums (but only in some municipalities, notably Makati).
• Defined insurance coverage for Overseas Foreign Workers (OFWs)

State Involvement

GSIS, SSS, PhilHealth, OWWA, and Pag‑IBIG Fund are the five major state‑owned insurance/government institutions providing social or insurance-related coverage in the Philippines.

GSIS covers government employees with life and non-life protection plus pensions.

SSS provides social insurance retirement, disability, maternity for private-sector workers and OFWs.

PhilHealth administers the national health insurance program, now extended under the UHC Act.

OWWA manages programs including mandatory insurance for overseas Filipino workers.

Pag‑IBIG (the Home Development Mutual Fund) administers group life and mortgage-related benefits along with housing finance.

Tariff Classes

Motor insurance, bond business, earthquake, fire following earthquake, typhoon and flood are subject to tariffs.

Premium Taxes and Charges

All non‑life insurance premiums, except for accident and health classes, are subject to 12% VAT, including reinsurance premiums. Additionally, non‑life policies are subject to a 12.5% documentary stamp tax, while property premiums incur a 2% fire service tax.

For life insurance, the premium tax was reduced to 2% under Republic Act No. 10001, and stamp duty now operates under a reduced sliding scale. Although intended to phase out after five years, these provisions are intact and enforceable.

Policy Language

Insurance policies are generally issued in English and denominated in Philippine Peso (PHP).

Foreign currency policies may be issued when allowed, typically for international accounts.

The Philippine non-life insurance sector continues to expand, with gross premiums reaching approximately PHP 140 billion in 2024. Growth has been supported by increased demand across motor, property, and casualty lines, alongside a generally stable economic environment. Reinsurance strategies have evolved, with leading insurers shifting from proportional treaties to excess-of-loss structures, particularly in property and marine cargo classes.

Facultative reinsurance is now commonly used to manage large or complex risks that exceed treaty limits or when insurers seek greater control over exposures. Reinsurance capacity in the Philippines has also grown, helping insurers navigate catastrophe risk more effectively. However, reinsurers are cautious, maintaining disciplined pricing and underwriting practices, especially in high-risk areas.

The Philippines has one privately owned professional reinsurer, which is publicly listed on the Philippine Stock Exchange. All non-life insurers are legally required to offer this reinsurer up to 10 percent of their reinsurance treaties. The reinsurer has full discretion to accept or decline these cessions. This mechanism supports domestic capacity and encourages local retention of reinsurance risk.

Before approaching international markets for facultative reinsurance, insurers must first obtain declinations from at least five local direct insurers and the domestic professional reinsurer. As a result, there is a growing trend toward placing facultative reinsurance within the local market, particularly for property and engineering risks.

The primary distribution channels for non-life insurance in the Philippines are agents and brokers. Bancassurance is also playing an increasingly important role, driven by the strong presence of banks in the financial sector and their ability to leverage wide-reaching marketing networks. The collaboration between insurers and banks has expanded the reach of insurance products, particularly in urban and consumer-focused segments.

The Philippines is highly exposed to earthquakes, volcanic eruptions, and typhoons, with typhoons causing frequent flooding, especially in Metro Manila, Quezon City, and Pasig. In 2023 alone, disasters affected over 12 million people, with losses exceeding PHP 23 billion.

Despite the risks, insurance penetration is below 2% of GDP, leaving a wide protection gap. As of 2025, insurers are introducing catastrophe covers, microinsurance, and parametric products to boost disaster resilience.