Supervision and Control

Principal Legislation

  • Presidential Decree 1460 (Insurance Code) of 1978 regulating insurance and reinsurance operations.
  • Presidential Decree No 1270 requires insurers to offer the sole indigenous reinsurer a 10% share of all outward treaties, which the corporation has the prerogative to decline.
  • Section 218 (Insurance Code) requires all life and non-life insurance companies that are authorised to do business in the Philippines to cede their excess risks to other insurers in the market before resorting to foreign reinsurance placements.
  • Section 219 (Insurance Code) require that a company ceding facultative reinsurance abroad must show the commissioner that the local market cannot provide the reinsurance being sought abroad.
  • Department Order No 15-2012 sets out the capital requirements for insurance and reinsurance companies with effect from 31 December 2012.


The insurance supervisory authority is known as the Insurance Commission. It is a government agency under the aegis of the Department of Finance. The principal non-life insurance association is the Philippine Insurance and Reinsurance Association (PIRA). The Philippine Life Insurance Association, Inc (PLIA) represents the interests of all life insurers who are members of the association.

Admitted / Non-admitted

Non-admitted insurance is not permitted in the Philippines except in relation to marine cargo imports and exports (see below) because the law provides that insurance must be purchased from locally authorised insurers, unless special permission is granted by the IC.

Risks not situated in the Philippines but which are owned by Philippino interests are not affected by the non-admitted regulations.

Marine cargo imports and exports may be insured on a non-admitted basis subject to the terms of trade of the shipment.

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)
  • National health (state scheme).
  • In July 2012 a draft private members bill was under consideration to introduce a compulsory insurance requirement for operators of public transport services. It has not yet been passed into law.

State Involvement

There are five major state-owned insurance institutions.

Tariff Classes

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

Premium Taxes and Charges

All non-life, except accident and health but including reinsurance premiums subject to 12% VAT while property/casualty is subject to a stamp duty of 12.5%.

Property subject to 2% fire services tax.

Republic Act No 10001 reduced life insurance premium tax from 5% to 2% of premiums effective 2010. Documentary stamp tax on life policies was also reduced and now operates on a sliding scale. The new tax rates will be effective for a period of five years before being abolished completely.

Policy Language


Non-Life (P&C) Insurance Market

Changes continue to take place in the market, principally comprising moves towards higher retentions and conversion from proportional treaty reinsurance to excess of loss in the property and marine cargo classes.

The 10 leading insurance companies have all converted their property treaties to excess of loss contracts and rely upon facultative reinsurance support when risks exceed their excess of loss limits, or they want to restrict their exposures.

Reinsurance Market
There is one privately owned professional reinsurer in the Philippines. It is listed on the stock exchange. All non-life insurers are obliged by law to offer this reinsurer up to 10% of their reinsurance treaties which the reinsurer may, at its discretion, accept or decline. Insurance companies in the Philippines are required to have declinations of offers of facultative reinsurance from at least five local direct insurers and the domestic professional reinsurer before seeking support from the overseas market. An increasing amount of facultative reinsurance is placed in the domestic market in particular for property and engineering risks.
Distribution Channel
The dominant distribution channels for non-life insurance are agents and brokers. Bancassurance is becoming more of a feature in the delivery of non-life insurance, as banks are a powerful lobby within the Philippines and have effective marketing organisations.
Natural Hazards
Earthquake fire and shock together with volcanic eruption are potentially the most catastrophic hazards in the Philippines. Tropical cyclones or typhoons accompanied by strong winds are a constant and real threat, but damage from windstorm alone is rare. Typhoons are the main cause of flooding in the country. Metro Manila, Quezon City and Pasig are particularly exposed to flooding.