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Republic of the Philippines

Department of Finance
INSURANCE COMMISSION
1071 United Nations Avenue
Manila
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CN: AJAI6-{X)61

Circular Letter No. 2017-5?

Date 12 Deeeaber 2a
Supersedes New

CIRCULAR LETTER

TO : All lnsurance Companies and intermediaries

SUBJECT : Guidelines on Group lnsurance of Both Life and Non-life

lnsurance ComPanies

WHEREAS, group insurance has become an important line of business in insurance

that provides certain cover to classes of individuals at a lower cost;

WHEREAS, group insurance as a scheme of distribution has gained tremendous

growth particularly in the microinsurance level and has become a reliable vehicle to
promote financial inclusion;

WHEREAS, while group insurance provides simple distribution of products and

benefits at lower cost, it poses issues on transparency, disclosures, and obligations
of the insurers and PolicYholders;

WHEREAS, group insurance may be used as a scheme by some persons acting as

policyholders in a group policy primarily for income generation rather than the
promotion of interest of its members and to mask the lack of license as an
intermediary;

WHEREAS, group insurance greatly affects the interest of employees and ordinary
Filipinos as it is now being availed of by employees through group life and health
insurance and by low income groups and as an add on to services required by or
offered by public utility providers such as those in public transportation and
telecommunication.

Head Office; P.O. Box 3589 Manila FAX No.522-14-34Tel. Nos.523-&1-61 to 70 Website: wwwinsurance.gov.ph
NOW, THEREFORE, by the power vested in me by Section 437 of the lnsurance
Code, as amended, the following Circular on the Guidelines on Group !nsurance is
hereby promulgated:

Section 1. Groups Subject of Group insurance

1.1. A group should consist of persons with a commonality of purpose, interest or

circumstances or engaging in a common economic and/or social activity similar,
but not limited to employees of a corporation or member of a professional
association.

1.2. lnsurable groups can broadly be classified into two main groups, namely: a)
employee group, where all members work for the employer proposing to cover
them; and b) affinity group, whose members have a commonality other than
employment and whose insured members are not its employees such as
depositors or borrowers of banks or lending companies, passengers of
transportation operators, members of a professional associations, cardholders
of credit card companies, members of an employees welfare associations,
beneficial owners of a trust handled by a trustees, among others. ln an
employee group, the employer becomes the policyholder and the employees
are the insured persons. ln the affinity group, the policyholder is the association,
trustee, union, and other organization to which an individual insured must
belong or be associated with to be insured.

1.3. The policyholder may also include any entity in which two or more employers or
two or more associations, trustees, and organizations of the affinity groups
belong. The benefits provided by the group insurance policy shall redound to
the benefit of the insured persons or their beneficiaries.

1.4. The term "employees" in the employee group may include the officers,
managers and employees of subsidiary ot affiliated corporations when the
business of such subsidiary or affiliated corporations is controlled by the
policyholder through stock ownership, contract or otherwise, or when the
corporation is controlled by affiliated corporation through stock ownership,
contract or othenruise. The term "employees" may also include the partners who
constitute the partnership entity acting as policyholder.

1.5. The employer as policyholder includes the state and any political subdivisions
thereof, which may contract for group insurance in the same manner as any
private employer. For public employer, members in group insurance may
include voters or residents within its territorialjurisdiction.

1.6. Coverage of the group insurance in the employee group may be extended to
dependents of the insured member, which include the member's spouse,
children, siblings and parents.

1.7. The association, partnership or corporation contracting as policyholder must

have a valid certificate of registration from the Securities and Exchange
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Commission. ln the case of a cooperative, it must be registered with the

Cooperative Development Authority. Unless an individual possesses valid
registration for its single proprietorship business from the Department of Trade
and lndustry, he or she cannot act as policyholder for his or her employees.
This requirement does not apply to recognized and legal foreign entities which
have offices or branches in the Philippines such as diplomatic, foreign or
international organ izations.

Section 2. Groups Not Eligible Under Group lnsurance

2.1. No group should be formed with the main purpose of availing insurance.
There should be a clear and evident relationship between the member and the
policyholder for services other than insurance.

2.2. No group policy shall be issued with the insurance agent or insurance broker
as policyholder, except when the covered members are its employees.

Section 3. Obligations of the Policyholders

3.1. The policyholder has the following obligations:

a) To contract with insurance company for the coverage of individual

members under a group policy taking into consideration the best
interest of its members;
b) To negotiate for a reasonable premium which its members may partially
or fully pay;
c) To distribute to the insured members the statement, proof of cover,
confirmation or certificate issued by the insurer;
d) To make available to the insured for reading or copying the master
policy and relevant documents and provide a copy thereof in paper or
electronic form in an amount not exceeding the cost of reproduction or
delivery;
e) To collect from the insured person an amount not higher than the
amount of premiums indicated in the policy;
f) To faithfully remit to the insurer the amount collected as premium;
g) To maintain the list of insured members or documents to prove
individual membership or enrollment;
h) To assist the insured person or beneficiary in the processing of claims
and submission of documents to the insurer;
i) To support individual insured or beneficiary in the filing of cases
relevant to the non-payment of claims;
j) To inform the active members of the impending cancellation of the
group policy by the insurer upon its receipt of the notice; and
 k) To inform the covered members of the fact of issuance and important
contents of any endorsement or rider issued after the issuance of the
group policy which shall be agreed upon by the policyholder and the
insurer.

3.2. lnsurers shall communicate the provision of Section 3.1 to the policyholders
during the negotiation or preparation of the group policy or immediately after the
issuance of the policy.

Section 4. The Insured

4.1. When an employer buys a group insurance policy as a service benefit for its
employees and pays the premium in full or in part, the employer shall be treated
as the policyholder with the employees being the insured.

4.2. ln an affinity group, the individual group members shall be treated as the insured
and the group organizer or entity will be the holder of the group policy. ln such
case, the employer/group organizer who acts as policyholder shall request the
insurer to issue a statement', proof of cover, confirmation, or certificate of
insurance to individual employees or members with clear reference to the group
policy and benefits secured thereby.

4.3. The claims of individual persons insured may be processed by the policyholder.
While the employer and policyholder may play the role in facilitating the
submission and settlement of a claim, the insurer shall remain responsible in
ensuring that the claims payment is made to or received by the proper payee,
whether he or she be the insured member or beneficiary.

Section 5. Premium, Commission and Charges

5.1. The amount of premium or basis of rates and benefits shall be clearly specified
in the group policy. The policyholder shall not vary the premium or benefits of
the insured persons unless such changes are stipulated in the policy provisions
on premiums or benefits or is made in accordance with a pre-determined basis
of determining the sum insured such as the outstanding loan amount. ln any
case, the insurer and policyholder should agree to such changes.

5.2. The premium for individual member shall always appear in the statement, proof
of cover, confirmation or certificate of insurance issued to the insured member.
lf the policyholder agrees to pay in full the premium for the members, it should
be clearly stated in the statement, proof of cover, confirmation or certificate of
insurance that the premium will be shouldered entirely by the policyholder. This

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Section Xa @) of the lnsurance Code requires that the group life policy shall contain a provision that
the insurer will issue to the policyholder for delivery to each person insured a statement as to the
insurance protection to which he is entitled, to whom the insurance benefits are payable, and the rights
set forth in paragraphs (h), (i) and O of Section 234.
 is to ensure that claims will not be denied by the insurer on the grounds of non-
payment of premiums by the insured.

5.3. When the insurer contracts or agrees to the collection of premium required from
the individual insured and the remittance by the policyholder to the insurer, the
insurer shall not set-up the non-payment of the premium as a ground for denial
of the claim when the policyholder fails to remit the amount to the insurer and
the insured person, beneficiary or any person in his or her behalf can prove that
the insured person had paid the premium and secured the proper receipt.

5.4. The commission paid to an insurance agent or insurance broker with respect to
a group insurance policy sold shall not exceed the percentage or amount set in
the applicable Circular.

5.5. A service fee or collection fee may be paid by the lnsurer to the Policyholder. !t
is understood that the payment of a service fee or collection fee to the
Policyholder isnecessary to
help defray the costs for servicing and
administering the plan.

5.1. No insurance company shall give any officer, employee or director of the
policyholder a remuneration, commission or payment of any other description
from the insurer by reasons of the issuance or administration of the group
policy.

5.2. The insurer shall advise the policyholder to distinctly separate the amount of
premium for group insurance from the cost of other products, entry to a credible
program or other services it offers. The amount taken for insurance should be
disclosed to the member who pays part or the entire premium for his or her
coverage.

Section 6. Group Policy, Certificate of lnsurance and Endorsement

6.1. The group policy shall be identified as a group policy. For proper identification,
the word "group" or "master" may be affixed in the name of the policy or in the
policy number. No individual policy form or those not approved as a group policy
form shall be issued to cover group of individual persons, which shall normally
be covered and is rated under group insurance.

6.2. The cover page or first page, or specifications page shall identify the name of
the policyholder, the policy number, and the effective date of the group policy.
For life insurance and other insurance products to be issued by a life insurance
company, the information shall include the benefits, effective date of the
individual coverage, expiry date, participation requirement, eligibility conditions,
and whether the insurance is contributory or non-contributory.

6.3. Each insured member shall be provided by the insurer, which may be made
through the policyholder, a statement, proof of cover, confirmation or certificate
of insurance.
6.4. The statement, proof of cover, confirmation or certificate shall contain the
following information :

The full corporate name, address and contact details of the insurer;
The name of the policyholder;
The name of the insured member;
Master policy number;
The document number;
The period of insurance for the member insured;
Premium;
A certifying language or statement of coverage;
Benefits and amount of coverage provided in the policy;
Reporting period provided in the group policy;
A statement regarding the availability of the group policy for inspection,
reading or copying; and
For group life insurance, the beneficiary, claims notice clause and
claims procedure.

6.5. The compliance under Section 6.4 above is without prejudice to the other
requirements as stated in other Circular.

6.6. The marketing name or logo may be placed on the first page or cover page and
statement, proof of cover, confirmation or certificate provided that the marketing
name or logo does not mislead as to the identity of the insurer.

6.7. For group under a blanket policy where the insured persons are the unnamed
passengers of the public utility vehicles or ships or unnamed persons in a
specified group, where no enrolment was made to cover them or no contribution
for premium was taken from each person insured, the statement, proof of cover,
confirmation or certificate may be dispensed with. ln blanket policy, the
individual insured is automatically covered and need not apply for the coverage.

6.8. Directors and officers liability insurance and any other insurance covering the
liability against third party claims of the organization including its subsidiaries,
directors, officers, and employees are not included under these Guidelines.

Section 7. Termination of Group Policy

7 .1. ln case of the termination of the group policy covering health and/or accident by
the insurer, the notice of termination or cancellation shall contain an advice to
the policyholder to inform the insured person with active coverage of the
termination of the group policy.

7.2. ln case of termination or cancellation of the group policy other than life in
accordance with Section 64 and 65 of the Insurance Code, no automatic
cancellation of the group policy is allowed since the lnsurance Code requires
the issuance of the notice of cancellation.
7.3. Automatic termination or cancellation of the individual coverage may be
provided in the group policy.

7.4. lf possible and due to the emergence of faster and easier communication
technology such as emai! and text messaging, important communications or
advice may be sent to the insured members by the policyholder or insurer.

Section 8. Sales Materials

The insurer shall ensure that all sales materials and prospectuses of the
insurance plans are properly drawn up and comply with the applicable
regulations on insurance advertisement and disclosures and the protection of
policyholders' interest.

Section 9. Government Mandated lnsurance

The lnsurance Commissioner may relax any of the requirements for group
insurance hereto for government mandated insurance taking into consideration
the purpose of the law, regulation, intention of the program and the availability of
other protection to the individual insured.

Section 10. Applicable Guidelines on the Approval of Product Forms and

Microinsurance

These Guidelines shall be read and complied with in conjunction with the
applicable guidelines on the approvat of product forms, Section 234 and other
applicable provisions of the lnsurance Code, and regulations on microinsurance.
Flexibitity and adjustment may be afforded on the policy provisions and
statement2, proof of cover, confirmation, or certificate of insurance for
microinsurance taking into consideration its requirements of simplicity,
accessibility and affordability.

Section 11. Transitory Provision

Unless provided for by the Insurance Code and other applicable Circulars of the
Commission, insurance companies shall not issue after December 31,2018
policy contracts and ancillary forms unless the required information or provisions
in this Circular are incorporated, subject to submission and approval under
Section 232 of the lnsurance Code. Policy forms to be submitted for approval

2 provision that
Section na @) of the lnsurance Code requires that the group life policy shall contain a
the insurer will issue to the policyholder for delivery to each person insured a statement as to the
insurance protection to which he is entitled, to whom the insurance benefits are payable, and the rights
set forth in paragraphs (h), (i) and O of Section 234.
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after the effectivity of this Circular shall comply with the requirements provided
herein.

Section 12. Separability Glause

lf any provision of these Guidelines or any part hereof be declared invalid or

unconstitutional, the remainder of the Guidelines or other provisions not
otherwise affected shall remain valid and subsisting.

Section 13. Effectivity

This Circular Letter shalltake effect immediately.

FUNA
Commissioner

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