Gentlemen,
This refers to the article entitled “Unholy Alliance” written by Mary Ann Reyes published in the Sept. 14 issue of The Philippine STAR – Business section regarding the alleged failure of the Insurance Commission to act on the complaints filed by Steel Corporation of the Philippines (“SCP” for brevity).
We would like to take this opportunity to clarify matters in relation to the issues raised in the article.
First, the insurance claims of SCP are pending before the regular courts, one in the Regional Trial Court of Batangas City and another in the Regional Trial Court of Makati City. The cases involve claims to recover insurance proceeds for material damage due to fire and business interruption losses provided under the insurance policies. At present, the cases are being heard and decisions are yet to be issued by the respective courts. There is no way for the Insurance Commission to assume jurisdiction and hear the cases because the claims exceed the jurisdiction amount of P5 million provided under Section 439 of the Insurance Code, as amended by RA 10607 which took effect on Sept. 20, 2013.
Second, what is pending before the Insurance Commission are administrative cases seeking the suspension and revocation of licenses of the insurance companies who issued the insurance policies involved in the incident. These cases do not seek to recover insurance proceeds for material damage due to fire and business interruption losses provided under the insurance policies.
Thus, the decisions in these cases will not effect the capability of SCP to continue its operations since these cases will only affect the licenses and the authority of the insurance companies to engage in insurance business.
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Third, while the administrative cases filed by SCP in the Insurance Commission will necessarily tackle the issue of whether or not the denial of the claims by the insurer were justified, a ruling in favor of SCP does not mean it will received the more than P1 billion insurance proceeds.
The Insurance Commission may, assuming said position is tenable, only issue an order suspending or revoking the license/s of the insurers. Further, even assuming that what SCP filed with the Insurance Commission is a complaint for the recovery of the insurance proceeds, the same can not be given due course since the amount involved exceeds the aforementioned jurisdictional amount.
Fourth, the first administrative case docketed as I.C. ADM. Case No. 420 filed by SCP against UCPB General Insurance Corp.. Oriental Assurance Corp., PNB General Insurers Co., Inc. and Equitable Insurers Co., Inc. had already been decided by this commission, but SCP recently filed a Motion for Reconsideration which is currently pending.
Fifth, the second administrative case docketed as I.C. ADM. Case No. 515 filed by SCP against Philippine Charter Insurance Corp., Mapfre Insular Insurance Corp., Standard Insurance Co., Inc., Asia Insurance Phils. Corp., and New India Assurance Co., Ltd. is still pending due to the numerous motions initiated by the complaint, motions that question technicalities rather than the substance of the complaint. This is the alleged subject of the Petition for Mandamus filed by SCP that is pending with the Court of Appeals. At present, we have yet to receive an Order to Comment from the Court of Appeals, but the same had already been referred by this commission to the office of the Solicitor General.
Sixth, based on the records of the cases, SCP filed a Petition for Rehabilitation with the Regional Trial Court of Batangas City, which was subsequently converted into a liquidation proceeding, as early as 2006. Thus, even before the occurrence of the two fires and the eventual filing of the administrative and civil cases, SCP’s operation had already been in peril due to its dire financial situation.
Finally, contrary to the sweeping conclusion made in the article that the insurers failed and refused to pay SCP’s claims despite complete submission of the documents required, the records of the cases would show, as alleged by the insurers, that SCP denied their requests to inspect the property subject of the insurance policy and submission of documents contending that it had already submitted its claim fort resolution of the rehabilitation court. In fact, as for the insurers involved in the first administrative cases, the records would show that pending the completion of the evaluation of SCP’s claim by an adjuster, they made an preliminary payment in the amount of $450,000 for material damage.
Based on the foregoing, it would have been prudent on your part to verify the veracity of the facts by getting the Insurance Commission’s side, as well as the insurance companies involved, before publishing article suggesting fraud and collusion in an “unholy alliance” between the Insurance Commission and insurance companies.
Thank you.
ATTY. JOANNE FRANCES D. CASTRO
Media Relations Officer
Insurance Commission
