IC should stop deceptive insurance schemes
Credit to Author: AL S. VITANGCOL 3RD| Date: Fri, 08 Feb 2019 16:38:04 +0000
AN online search for the meaning of the word “insurance” will yield this — “Insurance is a means of protection from financial loss. It is a form of risk management, primarily used to hedge against the risk of a contingent or uncertain loss.”
For most of us out there, it is simply a “protection from financial loss” if something bad happens. Say, a life insurance pays off a certain sum of money when the insured dies. Or, a non-life motor vehicle insurance will cover the repair (or even replacement) of the vehicle when it is wrecked (or stolen).
How about insurance schemes disguised as “legit” insurance programs?
State of insurance in PH
The Philippine insurance industry is a billion-peso industry. According to statistical data (2016 latest figures) provided by the Insurance Commission, the total life insurance premiums paid for a year amounts to P182.8 billion while the total benefits paid out is P61.8 billion. For non-life insurance, the total gross premiums written is P78.5 billion. Annual growth rate for non-life insurance is about 15 percent. Thus, we can project the current figures from the 2016 data.
The insurance industry is regulated by the Insurance Commission (IC). The commission’s logo contains the year “1949” but strictly speaking, it was only in 1974, by virtue of Presidential Decree 63, that it was officially designated as the “Insurance Commission.”
One of the functions of the IC is the “review and approval of all life and non-life policies, pre-need, and HMO plans before sale to prospective clients.” (HMO stands for health maintenance organization, which provides health coverage for a monthly or annual fee.) According to its website, the IC is there “To safeguard the rights and interest of the insuring public, pre-need and HMO customers.”
Does this mean that the commission has pre-reviewed all the insurance policies, together with the “deceptive” fine prints? If it has done its job, then there will be no complaints from the side of the insured.
Manulife Insurance Co.
I had lunch last week with a former top executive of a major broadcasting network. Out of the blue, we began discussing insurance covers. He said that he took out an insurance from Manulife Philippines, and he paid the premiums for 20 long years. He was under the impression that he needed to pay for 20 years only and afterwards he would be insured for life — without paying premiums anymore. “As a matter of fact the insurance company asked me to continue paying premiums,” he said, and that his life insurance coverage would cease the moment he stops paying the premiums.
“What a coincidence,” I told him. I can still remember when I was still a new employee, fresh from college, that a certain Mr. Clavano offered the Manulife Econosavers Life Insurance to our whole department. It sounds simple to understand. All we had to do was to pay our quarterly premiums for the next 20 years. After that, the insurance would pay for itself and we wouldn’t have to pay any more premiums at all. The best part was that we would be insured for the rest of our natural life here on earth. Some of us took the bait.
But what on earth happened? I stopped paying premiums at the end of the twentieth year (as I believed the sales talk of this Mr. Clavano). After a couple of years, I received a notice declaring that my insurance cover had already lapsed due to non-payment of premiums.
A few years ago, I was enticed to invest in a Platinum Elite insurance policy. The mechanics were as follows: Pay a single lump sum premium, watch your investment grow, and be covered for life as long as your premium is not withdrawn.
The proposal even included a purported letter-certification from Mr. David Banks, senior vice president and chief financial officer of Manulife. Banks certified that the absolute returns of the investment fund in 2009 was 33.80 percent, 39.39 percent in 2010 and 91.10 percent since inception. But there was a fine print there that read: “Past performance of the funds is not necessarily indicative of future performance. Yields are not guaranteed.”
To cut a long story short, I was forced to terminate the insurance after the holding period because it was not earning. It was losing and losing!
People’s General Insurance
A fellow engineer asked me for legal advice because People’s General Insurance denied his insurance claim. People’s denied the claim on the ground that the police report had the distorted phrase “patrol declares as he smell the driver with an alcohol content.” Does that mean that the driver is intoxicated or is driving under the influence of liquor?
The readers should note that a mere “smell of alcohol” is not a gauge on whether or not the ability of the driver is impaired. Under the Anti-Drunk Driving Act, a non-professional driver is considered drunk when his blood alcohol concentration (BAC) level goes beyond 0.05 percent. The BAC is established with the use of an alcohol breath analyzer. A non-professional driver, assuming he consumed an alcoholic beverage, is allowed to drive if his BAC is below 0.05 percent.
As always, insurance firms will look for loopholes so that they can deny the claim. The engineer had his vehicle repaired shelling out more than P400,000 of his own money. So, where is the “insurance protection” then?
The Insurance Commission should look into these things and “safeguard the rights and interest of the insuring public.” Isn’t this their mandate anyway?
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