A friend sent me an update on the case of the Steel Corporation of the Philippines and its long unpaid P1 billion in claims against two consortia of insurance companies which insured its steel plant in 2007. The steel plant, unfortunately, was hit by fires in 2008 and 2009.
Under the new Insurance Code passed in August 2013, the capital required for insurance firms will increase every three years until 2022. The objective of the increases is to ensure that insurance firms have sufficient buffer against risks amid a growing economy and a rising demand for financial instruments.
The new Insurance Code likewise institutionalized bancassurance—the partnership between a bank and an insurance firm that allows sale of insurance products in the bank’s branches—and micro-insurance activities.
Despite the amended Insurance Code, there lurks the perennial problem of non-payment of claims of to industry clients, especially when the claim runs into billions of pesos.
This is the case of SCP, the only remaining major steel manufacturer. The SCP has asked the Court of Appeals to compel nine insurance companies to pay it over P1 billion in insurance, for losses because of fires that gutted its Batangas steel mill.
On July 25, 2007, SCP insured its factory with the following insurance companies: UCPB General Insurance Corporation—40 percent; Oriental Assurance Corporation—40 percent; PNB General Insurers Co. Inc.—15 percent, and Equitable Insurers Co., Inc.—5 percent.
After the 2008 fire, SCP’s insurance claim was ignored by the four insurance firms.
Stung by that experience, SCP insured its asset to another consortium of insurers namely: Philippine Charter Insurance Corporation—29.5 percent; Mapfre Insular Insurance Coporation—26 percent; Standard Insurance Co. Inc.—12 percent; Asia Insurance Phils. Corp. 8.50 percent, and New India Assurance Co., Ltd.—14 percent.
Unfortunately, a second fire broke out on December 7, 2009, destroying part of SCP’s $216-million cold rolling steel manufacturing facility in Balayan, Batangas. The insurers refused to pay the balance of the insurance claim of SCP for that 2009 fire, except for one.
Standard Insurance Co. paid its share amounting to $5.025 million. The settlement effectively validated SCP’s claims. The other consortium members refused to pay their share.
Thus, two separate cases were filed by the SCP with the IC—one each for the two groups of insurers. SCP expected quick settlement. Cases filed with the IC shall be resolved within 30 days from the time all documents required are filed.
Last July 28, SCP went to the Court of Appeals to compel the IC to resolve SCP’s pending cases for the 2008 and 2009 fire claims.
In industry cocktail talks, there seems to be an “unholy alliance” between the IC and the insurance industry represented by the 78-strong Philippine Insurance and Reinsurance Association (PIRA) and the 33-strong Philippine Life Insurance Association (PLIA). Notably, Insurance Commissioner Emmanuel F. Dooc came from the insurance industry and once headed PLIA as its president.
Since Dooc is on first-name basis with the big players in insurance. Naturally, in conflicts of claims, he cannot be expected to be adversarial towards his insurance industry friends.
Since the primary mandate of the IC is to conduct investigations, inquiries and hearings in order to determine an offense or violation of any parties to an insurance contract, SCP filed the case with the IC to seek redress for the non-payment of the insurance companies of the insurance proceeds worth more than P1 billion.
President Duterte likes his men to be fair and square and avoid appearances of red tape, conflicts of interest or outright graft.
Commissioner Dooc should be such a man. He cannot be anything less. He also knows Duterte is an impatient man. The strong-willed President has repeatedly promised a clean government, a 101-percent clean government.