Claim Settlement (Secs

CLAIM
SETTLEMENT
(SECS.247-251)
ABITAN, ALEXANDRA P.
CLAIMS SETTLEMENT
the indemnification of the loss
suffered by the insured.
The claimant may be:

(1) INSURED
(2) REINSURED
(3) INSURER who is entitled to subrogation
(4) THIRD PARTY who has a claim against the
insured.
UNFAIR CLAIM SETTLEMENT PRACTICES:
GROUNDS CONSIDERED AS SUFFICIENT CAUSE OF THE SUSPENSION OR
REVOCATION OF AN INSURANCE COMPANY'S CERTIFICATE OF
AUTHORITY(SECTION 247)
if committed without just cause and performed with such frequency

as to indicate a general business practice, unfair claim settlement
practices:
(a) knowingly misrepresenting to claimants pertinent

facts or policy provisions relating to coverage at
issue;
(b) failing to acknowledge with reasonable
promptness pertinent communications with
respect to claims arising under its policies;
(C) failing to adopt and implement reasonable
standards for the prompt investigation of claims
arising under its policies;
(D) not attempting in good faith to effectuate

prompt, fair and equitable settlement of claims
submitted in which liability has become reasonably
clear; or
(E) compelling policyholders to institute suits to

recover amounts due under its policies by offering
without justifiable reason substantially less than the
amounts ultimately recovered in suits brought by
them. (Sec. 247)
Evidence as to numbers and types of valid and
justifiable complaints to the Commissioner against an
insurance company, and the Commissioners complaint
experience with other insurance companies writing similar
lines of insurance shall be admissible in evidence in an
administrative or judicial proceeding brought under this
section
If it is found, after notice and an opportunity to be

heard, that an insurance company has violated this section,
each instance of non-compliance with paragraph (1) may be
treated as a separate violation of this section and shall be
considered sufficient cause for the suspension or revocation
of the companys certificate of authority.
ILLUSTRATIVE EXAMPLE:
Repair done by insured after insurer failed to take

action despite notice of accident.
On its way to Baguio, a spark coming from the generator caught a
fuel line, causing fire inside engine of D's vehicle which is covered by a
comprehensive motor policy. R (insurer) contended that there was
violation of the "Authorized Repair Limit Clause." It appeared that notice of
the accident was sent to R without the latter taking any action thus
compelling D to have the vehicle towed to Manila and repaired.
Issue: Is D entitled to indemnity under the foregoing circumstances?
Held: Yes. D, under the situation, acted in evident good faith, with no other
purpose but to expedite the repair, to prevent further inconvenience, it
appearing that loss of use being a consequential loss is excepted from the
policy. R was ordered to pay the amount of repair and towing expenses as
limited by the policy, plus attorney's fees. (Phil. Episcopal Church vs. The
New Zealand Insurance Co., Ltd., I.C. Case No. 40, March 24,1977.)
MATURITY OF CLAIMS
LIFE INSURANCE NON-LIFE INSURANCE
EITHER:
(a)Upon the death of the (a)Upon the happening the
person insured. event insured against; and
(b)Upon his surviving in a (b)Event must occur within
specific period. the period specified in
(c)Otherwise contingently on policy, otherwise insurer
the continuance or has no liability.
cessation of his life.
(section 180)
DELIVERY OF PROCEEDS
WITHIN 30 DAYS AFTER
GENERAL RULE:
(a) Proof of Loss is received by
The proceeds must be delivered
insurer; and
immediately after the maturity of
(b)Ascertainment of loss or
the policy
damage is made either by
agreement between the
EXCEPTION:
insured and insurer or by
IF PAYABLE IN INSTALLMENT or as
arbitration.
an ANNUITY when instalment or
annuities becomes due.
IF ASCERTAINMENT IS NOT MADE
WITHIN 60 DAYS AFTER SUCH
IF MATURITY IS UPON DEATH
RECEIPT by the insurer of proof of
within 60 days after presentation of
loss then loss and damages shall be
claim and filing of the proof of
paid within 90 days after such
death. (sec. 248)
receipt. (Sec. 249)
EFFECT OF REFUSAL OR FAILURE TO
PAY WITHIN THE TIME PRESCRIBED
(1) This entitles the beneficiary to collect the interest on

the proceeds of the policy for the duration of the delay
at a rate TWICE the ceiling prescribed by the monetary
board (unless the refusal to pay is based on ground that
claim is fraudulent)
(2) In case damages are awarded, this includes

attorneys fees and other expenses incurred due to
delay (plus the interest) (Sec. 248 and 249)
IN CASE OF LITIGATION
COMMISSIONER OR THE COURT has the duty
to determine whether the claim has been
unreasonably denied or withheld. Failure to pay
any such claim within the prescribed time shall be
prima facie evidence of unreasonable delay in
payment. (Sec. 250)
NOTE: The insured shall be entitled to collect

damages and the interest provided which has been
increased from 12% to 24%.
CONFLICTING RESOLUTIONS OF TRIAL
COURT AND COMMISSION
I. COMMISSION
TRIAL COURT
Not necessarily Must establish

foreclose the substantial evidence.
administrative case.
Insured must establish
a preponderance of
evidence.
Findings of which will
not restrain the
powers of the
Commission
It is unlawful to:
(1) Present or cause to be presented any fraudulent
claim for the payment of a loss under a contract of
insurance;
(2)Fraudulently prepare, make or subscribe any writing

or intent to present or use the same, or to allow it to
be presented in support or any such claim. Any person
who violates this section shall be by a fine not
exceeding twice the amount claimed or imprisonment
of 2 years or both at the discretion of the court.
(Section 251)
DAMAGES, RECOVERABLE
IN CASE OF UNREASONABLE DELAY
ATTORNEYS FEES
OTHER EXPENSES INCURRED BY THE INSURED
PERSON BY REASON OF SUCH UNREASONABLE
DENIAL OR WITHHOLDING OF PAYMENT
INTEREST AT TWICE THE CEILING PRESCRIBED BY
THE MONETARY BOARD OF THE AMOUNT OF THE
CLAIM DUE THE INSURED
AMOUNT OF THE CLAIM

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CLAIM

The claimant may be:

if committed without just cause and performed with such frequency

(a) knowingly misrepresenting to claimants pertinent

(D) not attempting in good faith to effectuate

(E) compelling policyholders to institute suits to

If it is found, after notice and an opportunity to be

Repair done by insured after insurer failed to take

Issue: Is D entitled to indemnity under the foregoing circumstances?

(1) This entitles the beneficiary to collect the interest on

(2) In case damages are awarded, this includes

NOTE: The insured shall be entitled to collect

Not necessarily Must establish

(2)Fraudulently prepare, make or subscribe any writing

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