A group of mostly Filipino-owned insurers under an insurance pool that secured the housing loans of Pag-IBIG Fund borrowers incurred losses in 2014, allegedly due to the termination of their contract with the Home Development Mutual Fund.
Former Adviser of Asean Insurance Council and Philippine Association of Life Assurance Companies Chairman Ignacio A. Macrohon Jr. said around half of 23 insurance companies, mostly Filipino owned, posted losses in 2014, when Pag-IBIG Fund President and CEO Darlene Marie B. Berberabe terminated an agreement with the pool in December 2013.
The Pag-ibig executive has since said this was in accordance with exit provisions in that agreement.
Macrohon said the insurance companies generated premium collection from Pag-IBIG Fund borrowers of between P4 million and P5 million every quarter. At that time, 500,000 borrowers were insured by the insurance pool.
“But by just a stroke of a pen in 2013, Berberabe replaced the pool with just one insurance company,” the insurance executive told the BusinessMirror.
According to him, the termination of the insurance-pool agreement was based on whim and completely without a reason.
Berberabe would later tell the Senate in a public inquiry on the matter that the new insurance provider offered a far superior and cheaper insurance contract than the original pool of 23 insurers offered.
“That statement was grossly misleading. She never gave that reason to us,” Macrohon claimed.
He argued that the premium paid on life insurance was not comparable and certainly should not be equated with the construction of a building.
What Berberabe told the Senate was “grossly misleading,” Macrohon insisted.
He also said once an insurance contract takes effect, it may not be terminated by anyone saved the insured-borrower.
To secure the payment of a Pag-IBIG loan, a mortgage is executed on the property. The insurance pool agrees to pay the loan whenever the borrower-mortgagor dies, removing the encumbrance.
As such, contracts are independent of the mortgage redemption insurance, which are, in any case, tied to the life of the loan, the individual insurance policies cannot be terminated until the loan is extinguished, according to Macrohon. When sought for comment on the alleged illegal termination of the Association of Life Insurance Companies’ contract with Pag-IBIG in 2013, Deputy Insurance Commissioner of the Legal Services Group lawyer Dennis B. Funa, said there is a pending case with the Regional Trial Court in Quezon City hearing the matter.
“In fact, it is now undergoing arbitration, wherein the chairman of the Arbitration Committee is an appointee of the insurance commissioner,” Funa said.