Insurance Commission promulgates rules on Bancassurance
On April 27, 2015, Circular Letter No. 2015-20, the implementing rules and regulations on Bancassurance, was signed by Insurance Commissioner Emmanuel F. Dooc.
Bancassurance or cross-selling of insurance products within the premises of the head office of a bank duly licensed by the Bangko Sentral ng Pilipinas or any of its branches was institutionalized by the Insurance Code, as amended by Republic Act No. 10607.
Under the said Rules, the selling of insurance products, including variable life insurance products, within the premises of a bank is only allowed after the Insurance Commission (IC) has approved the bancassurance agreement entered into by and between the insurance company and the bank. However, the cross-selling of microinsurance products by rural, cooperative and thrift banks shall remain to be governed by BSP Circular No. 683 dated February 23, 2010.
In the exercise of its regulatory and supervisory powers over insurance companies, the insurance regulator requires that the bancassurance agreement must contain a provision that the insurance company will comply with all its requirements as provided under Republic Act No. 10607 and its implementing rules. As to the reportorial requirements, insurance companies are required to submit an annual report showing a list of the banks with duly executed bancassurance agreement entered into by the concerned insurance company.
In order to protect the insuring public, the Rules provides that both the banking institution and insurance company should formulate an effective consumer protection framework specifically designed to address all complaints that may arise from the conduct of Bancassurance which shall include processes and procedures, among others.
One of the highlights of the Rules is on the limited role of bank employees in bancassurance. As a general rule, the role of the bank employees in bancassurance shall be limited to the referral of clients to the representatives of the insurance company. However, bank employees who have undergone the required training and who possess the required qualifications may make preliminary presentation of its insurance products as part of his/her task of presenting product option to bank clients. The IC will not require bank employees to obtain a license as an insurance agent as such task is merely incidental to their duties as bank employees.
In order to differentiate insurance products from bank products, the Rules require that the bank premises where bancassurance activities are conducted must be distinct and clearly marked to differentiate them from areas where bank products are sold.
Embodied in the implementing rules are additional market conduct guidelines involving variable life insurance products. In addition to the existing IC regulations on market conduct guidelines, the Rules on Bancassurance provides for provisions on enhanced consumer protection requirements by providing the minimum practices to be observed in the selling of variable life insurance products.
The implementing rules for Bancassurance was promulgated to put effect the provisions of the Insurance Code on bancassurance. This was a result of a series of consultations of the Insurance Commission with the Bangko Sentral ng Pilipinas and the insurance industry in the Philippines.
(signed) ATTY. JOANNE FRANCES D.C. CASTRO
Media Relations Officer
(02) 523-8461 to 70 loc. 115