THIS column is inspired by a recent article of my friend, Mitch Rellosa, in this same paper, entitled “The cover we cannot afford to drop.” He means insurance cover!
Watching the news about the damage caused by the recent typhoons and monsoon rains that lasted for almost four days, I realized how timely and appropriate Mitch’s article is. Aside from mentioning the benefits of having insurance cover on your property, he also mentioned the efforts being done by the insurance industry to make insurance more accessible to and affordable by the insuring public.
There are 58 nonlife insurance companies granted authority by the Insurance Commission to write various lines of insurance like fire, marine and aviation, health, accident, other casualty, suretyship and life for PR. In 2025, the total assets of these companies reached P391.8 billion, 50 percent of which assets are in investments approved and monitored by the Insurance Commission to ensure the ability of these companies to pay claims when they happen. These investments have to be liquid or easily convertible to cash for payment of claims. Total net worth of these companies is P147.2 billion.
Let us take a look at the men and women who manage and run the companies. As the saying goes, “It takes a village to raise a child.” It takes a lot of people who are technically trained on various lines of insurance to serve the needs of the insuring public. I will talk about some of them. The front-liners, or those assigned to marketing and sales, are the first ones that the insured meet. These are the agents and insurance brokers who are licensed by the Insurance Commission after meeting the pre-licensing requirements. They are the ones who will assist the clients on their insurance needs and ensure that they have the correct amount of insurance and covers for their properties. Title 1, Chapter IV of the Insurance Code of the Philippines, defines the difference between an agent and insurance brokers, and their relationship to the companies. They are not employees of the insurance companies. The companies also employ their own set of marketing specialists who can serve the clients directly or assist their intermediaries in their sales activities.
Just like an assembly line in a manufacturing firm, the risk is passed on or referred to the nonlife underwriter who evaluates the risks before these can be accepted or written. Section 329 of the Insurance Code requires that these underwriters should be registered with the Insurance Commission, and they should take the examination conducted by the commission and have had underwriting experience of two years in the particular line of risk involved.
When losses do happen and claims are filed, a separate unit or group is tasked with the evaluation of the claim and recommends them for payment. The claims people are employees of the company and are knowledgeable and experienced in the lines they are assigned to. Limits of amounts for approval of claims are usually in place in the companies which assures the claimant of a fair evaluation and analysis of his claim. There will be cases or claims that will need a third party to evaluate the validity and correctness of the amount being claimed for. The insurance company will need to hire the services of a third party or who we call as adjusters. Title 5 of the Insurance Code provides that, “No person, partnership, association or corporation shall act as an adjuster unless authorized so to act and by virtue of a license issued or renewed by the Commissioner...” The same section also differentiates between an independent adjuster and a public adjuster. The independent adjuster acts for and on behalf of an insurer in the adjusting of claims arising under insurance contracts or policies issued by such insurer. The public adjuster acts for and on behalf of an insured in negotiating or effecting the payment of a claim. Both types of adjusters have to obtain licenses from the Insurance Commission after complying with the commission’s requirements.
Why do companies hire or use the services of a third-party adjuster when they can train their own employees to be in-house adjusters? In addition to the expertise that may not be available in-house, there are complicated claims that will need very detailed examination and evaluation. The third-party adjuster provides an independent evaluation of the case which eliminates the usual biases or disputes between insurers and claimants in determining final settlement. They are trained in handling accidents of all kinds and have acquired not only expertise but also the strength and fortitude to deal with difficult and sometimes emotional cases.
There you are — the characters I mentioned constitute the assembly line of insurance from sales to claims. There are others who perhaps are not directly involved in the process but contribute to the efficient handling of the business of insurance. Indeed, it takes a village!