THE Insurance Commission is imposing stricter requirements on the appointment of resident agents of unauthorized foreign insurers to ensure that legal processes may be brought against these foreign insurers in connection with their transactions with local insurance companies.
Insurance Commissioner Emmanuel F. Dooc has issued Circular Letter 2015-2016, prescribing the rules and processes in the appointment of resident agents of unauthorized foreign insurers, reinsurers or brokers with whom local insurance companies transact with, mainly through reinsurance contracts.
Under current jurisprudence, unauthorized corporations that have transacted business in the Philippines can bring suit to assert a claim against persons they transact with, despite an express prohibition in the Corporation Code that prevents foreign corporations from transacting business in the Philippines without a license from maintaining a suit here.
Dooc’s new circular ensures the appointment of a resident agent by such unauthorized foreign insurance companies to ensure that domestic insurance companies that have transacted business with these foreign insurers can sue back, and that Philippine courts can easily acquire jurisdiction over the foreign insurers through their resident agents here.
The appointment of resident agents is mandated by Section 223 of the amended Insurance Code, which provides that, “No insurance company doing business in the Philippines shall cede all or part of any risks situated in the Philippines by way of reinsurance directly to any foreign insurer not authorized to do business in the Philippines, unless such foreign insurer or, if the services of a nonresident broker are utilized, such nonresident broker is represented in the Philippines by a resident agent duly registered with the commissioner as required in this code.”
The provisions on the appointment of a resident agent of unauthorized foreign insurance companies are meant to ensure that legal processes could be brought against these foreign corporations should disputes arise out of their transactions with domestic insurance companies.
The circular letter provides the requirements for the application and renewal of certificates of registration to act as resident agents of unauthorized foreign insurance companies. These requirements include capitalization requirements for the principal, and proof of authorization and financial capacity of the resident agent.
“In order to ensure the financial capacity of the [unauthorized foreign insurers], they must [a] meet the capitalization requirements equivalent to what is required of their domestic counterparts, or [b] must have a minimum financial strength rating duly certified by any of the following rating organizations: A.M. Best [‘A’- rating]; Fitch [‘AA’ rating]; Moody’s [‘Aa’ rating]; Standard and Poor’s [‘AA’ rating],” the circular said regarding the required capitalization of the unauthorized foreign insurer.
The resident agent must also submit the audited financial statements for the last three years of the unauthorized foreign insurer.
As to the resident agent, the requirements include a copy of the power of attorney authorizing the applicant to receive notices, summons and legal processes for and in behalf of the foreign insurer in connection with the actions or legal proceedings in the Philippines against such foreign insurer, such power of attorney duly notarized and authenticated by the Philippine consul in the place where the foreign insurer is domiciled; and the income-tax return of the resident agent.