Insurance Regulation and Industry Code of Conduct
What this domain tests
Insurance Regulation and Industry Code of Conduct tests the rules that keep the market solvent and fair: licensing, capital, market conduct and the agent's legal duties. The Insurance Commission administers the Insurance Code (PD 1460, as amended by RA 10607).
Core rules
- Insurers must be licensed and maintain minimum capital and solvency margins; policy forms and rates are filed or approved where required.
- Agents and brokers must be licensed; no person may solicit or negotiate insurance without a license.
- Prohibited conduct includes rebating (sharing commission with the client), misrepresentation, twisting (inducing lapse or replacement by misrepresentation) and churning (replacing policies mainly to earn commission).
- Transacting with an unauthorized insurer is restricted and carries penalties.
- Anti-money laundering rules require customer due diligence, record-keeping and suspicious transaction reporting.
- The Data Privacy Act (RA 10173) governs collection and sharing of client health and financial data.
- The agent's duty is to the client's interest: disclose material information, recommend suitable products and avoid conflicts.
Worked example
An agent offers to pay the client's first PHP 15,000 premium from her commission to close a sale. Reasoning: this is rebating, an inducement not stated in the policy, and is prohibited even if the client benefits. It also misstates the true cost of cover and creates a lapse or replacement incentive. The correct move is to document affordability constraints and right-size the policy, not to discount the premium. The agent risks suspension or revocation of her license.
Traps that cost marks
- Calling rebating "customer service".
- Sharing commissions with unlicensed referrers.
- Assuming compliance is only the insurer's job; agents face personal penalties.
- Posting client details on social media without consent.