INSURANCEBy: Love Leoann Duran

What is Insurance? A promise of compensation for

specific potential future losses in 

exchange for a periodic payment. Insurance is designed

to protect the financial well-being of an individual, company or other entity in the case of unexpected loss.

Agreeing to the terms of an insurance policy creates a contract between the insured and the insurer. 

In exchange for payments from the insured (called premiums), the insurer agrees to pay the policy holder a sum of money upon the occurrence of a specific event.

In most cases, the policy holder pays part of the loss (called the deductible), and the insurer pays the rest.

Examples include car insurance, health insurance, disability insurance, life insurance, and business insurance.

History of Insurance in the Philippines

Pre-Spanish Era - there was no insurance; every loss was borne by the person or the family who suffered the misfortune.

Spanish era – Insurance, in its present concept, was introduced in the Philippines when Lloyd’s of London appointed Strachman, Murray & Co., Inc. as its representative here.

1898 – Life insurance was introduced in this country with the entry of Sun Life Assurance of Canada in the local insurance market.

1906 – First domestic non-life insurance company, the Yek Tong Lin Insurance Company, was organized

1910 – First domestic life insurance company, the Insular Life Assurance Co., Ltd., was organized

1939 – Union Insurance Society of Canton appointed Russel & Surgis as its agent in Manila.  The business transacted the Philippines was then limited to non-life insurance.

1936 – Social insurance was established with the enactment of Commonwealth Act no. 186 which created the Government Service Insurance System (GSIS) which started operations in 1937.  The Act covers gov’t employees.

1949 – Government agency was formed to handle insurance affairs, where the Insular Treasurer was appointed commissioner ex-officio.

1950 – Reinsurance was introduced by the Reinsurance Company of the Orient when it wrote treaties for both life and non life.

1951 – First workmen’s compensation pool was organized as the Royal Group Incorporated.

1954 – RA 1161 was enacted which provided for the organization of the Social Security System (SSS) covering employees of the private sector.

At present, there are 130 insurance companies registered with the Office of the Insurance Commissioner.  Of these, 2 are composite insurance companies (engaged in both life and non-life insurance), 23 are life insurance companies, 101 are non-life insurance companies and 4 are reinsurance companies.

Top10 Life Insurance Companies in the Philippines

The latest figures show the numbers of 2009. The ranking is according to total premiums registered.

Rank Company Total Premiums

1 Philam Life & Gen. 10,892,909,604

2 Sunlife 9,565,859,352

3 Insular Life 6,183,786,001

4 Phil. Axa 4,440,526,432

5 BPI Philam Life 3,602,786,538

6 Pru Life 3,523,756,928

7 Generali Pilipinas 3,213,435,239

8 Manulife (Phils) 3,190,063,952

9 Grepalife Financial 2,274,757,169

10 United Cocolife 1,841,497,005

Basic Elements of Insurance

Policy

A policy or insurance policy is a contract that states all the specific conditions of an insurance plan. It is important to read and understand everything written in a policy before buying the insurance so that you know what benefits you are getting and the limitations of those benefits.

Losses

A loss is the cost of damage inflicted upon a piece of property or person. For instance, if you get in a car crash where the vehicle is totally destroyed, the loss would equal the full value of the car. While "damage" describes harm to a person or object, the term "damages" can describe the amount of money a person is legally obligated to pay another party for damage she caused. For instance, if you were the cause of an auto accident, you may be obligated to pay the other driver damages for losses he suffered.

Perils and Risk

All insurance policies deal with compensating the policyholder against perils. Perils are unpredictable events that can cause damages or losses. Every peril is associated with a certain amount of risk, which is the likelihood that the peril will occur. Geico defines risk as "the chance of suffering a loss." For instance, in auto insurance, a common peril is getting into a collision with another vehicle. When an insurance company creates an auto insurance policy, they assess the risk of the drivers. Drivers with clean driving records will typically be considered less risky and therefore might pay less for insurance.

Premium

The premium is the cost of an insurance policy. Premiums are typically paid on a normal recurring schedule, such as on a monthly, quarterly, biannual or annual basis.

Deductibles

Deductibles are costs that a person must pay toward losses and damages before an insurance company will pay. For instance, if your auto insurance has a $1,000 deductible on collisions and you get in a fender-bender that causes $1,250 worth of damage to your car, you must pay the first $1,000 to fix the car and the insurance company will pay the remaining $250. Deductibles protect insurance companies from having to pay for small losses. Choosing higher deductibles usually reduces premiums for the policyholder.

References

 http://www.investorwords.com/2510/insurance.html#ixzz24I06Hcki

http://www.batasnatin.com/law-library/mercantile-law/insurance/1573-history-of-insurance-in-the-philippines.html

http://www.randelltiongson.com/top-10-life-insurance-companies-in-the-philippines/

http://www.ehow.com/list_7365840_basic-elements-insurance.html#ixzz24IDBoFVV