The Insurance Commission met with representatives of global reinsurer Marsh UK and leading Filipino insurance company Prudential Life and Assurance to discuss the ongoing complaint against Marsh UK for alleged regulatory violations. The practice of using Filipino “fronting insurers” in order to do business in the Philippines was reviewed.
For the insurance needs of a leading airline, Marsh appointed Pioneer Insurance as its “fronting insurer,” while assuming all the insurance risks and liabilities.
Under Section 100 of the Amended Insurance Code, however, a reinsurance broker may only tender brokerage services to an insurer, and cannot tender insurance brokerage services nor insurance services directly to a client. Moreover, the same section states that the original insured would have no cause of action to recover insurance proceeds from the reinsurer.
PGA legal counsel Jose Bernas noted that apart from violating Section 100 of the insurance code, it constituted a clear case of doing business in the Philippines without a license.
“We believe that Marsh is operating illegally in the Philippines, and the IC should do something about in order to protect the industry and to assure that the insured will be protected,” Bernas said.
Under the guidance of IC hearing officer Brian Sibuyan, a mediation meeting was set between the two parties.