PEOPLE pin their hopes on insurance policies that provide protection for their lives, especially their loved ones, or their properties, and other insurable interests from possible financial losses, or worse, sudden death, in case of unexpected unfortunate events.
However, instead of being safeguarded against these possible losses, insurance policyholders are sometimes confronted with problems when dealing with their insurance providers, for instance in claiming the benefits promised once the events stated in the contract happen. One of the possible reasons could be their lack of knowledge of their rights as insurance policyholders.
Many policyholders only become aware of their rights once the need to claim from the insurance company arises. Ideally, they should already know their rights even before they avail of an insurance policy. After paying the premium, the insurance contract is considered effective, and these rights of the policyholders are then in force.
The Insurance Commission has issued Circular Letter 2016-30 containing a list of rights of an insurance policyholder, also known as the “Bill of Rights of Policyholders,” in line with its mandate to promote and safeguard the interest and welfare of the insuring public. A violation of any of these rights is considered as a breach in the relevant insurance laws, rules and regulations, and the Insurance Commission is authorized to impose sanctions or penalties for such.
The Bill of Rights describes a “policyholder” as the named owner of an insurance policy who may be the insured or assured in a life or nonlife insurance policy or a beneficiary, including insured member or covered dependents of a mutual benefit association (MBA) as well as a prospective client or the insuring public in general. On the other hand, “insurance companies” refer to a life or nonlife insurance company or an MBA duly authorized to engage in insurance business by the Insurance Commission, while a “policy” means an insurance policy, certificate of cover, or certificate of membership. The “intermediaries” referred to in the Bill of Rights is either an insurance broker or insurance agent.
First on the list is the policyholder’s right to a financially sound and viable insurance company, that is, the company should be financially stable and solvent enough to ensure its ability to honor its contractual obligations to its policyholders.
To be able to verify the companies, the policyholder also has the right to access the companies’ official financial information such as their audited financial statements and annual reports.
A policyholder also reserves the right to know about the status of the license of insurance companies, intermediaries, and soliciting agent, as well as to be offered a duly approved insurance product.
Information on the benefits, exclusions, and other provisions under the policy is also considered in the Bill of Rights of Policyholders, along with the right to receive the policy.
Policyholders share some of the most confidential information, such as personal and financial information, to the insurance companies. Unauthorized disclosure or revelation of such is protected by law. Thus, one of the most important rights in the Bill of Rights is the right to confidentiality of information.
The right to efficient service from insurance companies, intermediaries, and soliciting agents is also included in the Bill of Rights. This means that policyholders expect timely and prompt delivery of services from insurance companies, intermediaries, and soliciting agents.
Another very important policyholder’s right is the right to prompt and fair settlement of claims. When a policyholder files a claim, the insurance companies are expected to process and settle the claim with utmost good faith and within a reasonable period. This right also affords a policyholder to have the right to 1) receive a written acknowledgment of the claim; 2) prompt payment of valid claims within the period prescribed under the Insurance Code or relevant regulations; and 3) receive a written denial of claim with the stated ground and/or basis thereof.
Finally, any policyholder has the right to seek assistance from the Insurance Commission, for instance, in settling any controversy with an insurance company, intermediary, or soliciting agent. At the same time, policyholders shall have the right to 1) report any wrongful act or omission of an insurance company, intermediary, or soliciting agent; 2) file a complaint against any insurance company for unreasonable denial of a valid insurance claim; and 3) institute action against any erring insurance company, intermediary, and soliciting agent for any of the grounds under the Insurance Code or other relevant insurance laws.
The article is originally posted in Atty. Randy Escolango’s website. ATTY. RANDY B. ESCOLANGO, Ph.D. is currently the Deputy Insurance Commissioner for Legal Services of the Insurance Commission, Department of Finance. He may be contacted at rb.escolango@yahoo.com.