Finance Secretary Carlos Dominguez III has ordered an investigation into the publicized complaint by a local steel manufacturer against the Insurance Commission (IC) for this agency’s alleged “cartelized transactions” with banks and insurance companies.
In a Nov. 2 memorandum, Dominguez directed three top Department of Finance (DOF) executives to conduct an independent probe of the charges raised against the IC and its commissioner in an open letter that the Steel Corp. of the Philippines (SCP) had sent to President Duterte himself.
This letter-complaint was dated Oct. 4 but came out as a full-page newspaper advertisement in two major dailies only last Nov. 2.
In its letter to the President, SCP chairman-chief executive officer Abeto Uy accused the IC of inaction on the successive letters that the steel company sent to the IC over a span of almost eight years complaining about the alleged failure of nine of its 10 insurance companies to settle the separate claims for (1) material damages and (2) business interruption losses that SCP had sought from these insurers following the fires that struck the company’s Cold Rolling Mill (CRM) plant in Balayan, Batangas in 2008 and again in 2009.
In the memorandum that Dominguez issued on the same day that the newspaper ads came out (Nov. 2), DOF Undersecretary Bayani Agabin for the Domestic Finance Group (DFG), National Treasurer Roberto Tan and Assistant Secretary Mark Dennis Joven for the Revenue Operations Group (ROG) were directed to conduct the investigation into SCP’s complaint against IC and its head.
These three DOF executives were instructed in Dominguez’s memo to submit to him a preliminary report on Nov. 15.
The IC is headed by Commissioner Emmanuel Dooc.
“With the above actuations of the IC, it is now doubtful if the Commission indeed is there to protect the insuring public, or in actuality protects the interest of the insurance companies,” said Uy in his letter to the President.
“Having been associated with big insurance firms for several years in the past, it is doubtful if the present Insurance Commissioner is fit to hold the position, as he might be biased in favor of insurance companies he is very familiar and friendly with,” he added.
SCP described itself in the letter as “a domestic corporation established to engage in the business of manufacturing and distributing steel products. It is the only steel company registered with the Board of Investments under the Iron and Steel Act (R.A. 7103).”
According to Uy, “fire damaged a small part of the plant’s CRM” in Barangay Munting Tubig in Balayan town on June 8, 2008.
“The insurers in the first fire incident were UCPB General Insurance Corporation, Oriental Assurance Corporation, PNB General Insurers Co. Inc. and Equitable Insurance Corporation,” he said.
On Dec. 7, 2009, “fire again broke out at the premises of SCP, and this time the fire completely burned the entire SCP,” he said.
“Mapfre Insular Corporation, Philippine Charter Insurance Corporation (now known as Charter Ping An Insurance Corporation), Standard Insurance Corporation, Asia Insurance Phils. Corporation, New India Assurance Co., Ltd. and Malayan Insurance Co., Inc. were the insurers during the second fire incident,” Uy said. “The 2009 fire policy was brokered personally by Victorio Valledor, President and CEO of Lockton Phils. Insurance and Reinsurance Brokers, Inc.”
Uy recalled in his letter that, ”Sadly, the partial payment for the material damage claim in the first fire was paid directly by the insurers to the mortgagee bank.. The partial payment had already been given to SCP by the banks’ trustee, but thereafter, the insurers refused to pay the balance of SCP’s claim for material damage and none for its claim for business interruption losses.”
“After SCP’s continuous demand for payment of the business interruption losses, the insurers offered a measly amount compared to what is actually due to SCP,” he said. “Despite several mediation and conciliation conferences, settlement failed because the insurers would always allege that they ‘need to go back to their reinsurers.’”
Uy revealed that, “The insurers in the second fire incident, with the exception of Standard Insurance, refused to pay both the material damage and business interruption losses, citing technical grounds. The total amount of SCP’s claim amounts to $38,270,965 excluding interest.”
“What is also apparent is that the IC has been lax in the application and enforcement of its own circular as regards reinsurance reporting requirement supposed to be done by insurance companies. Only now is the IC seeking response from the insurance companies themselves, for a requirement which should have been submitted eight years and seven years ago, when the insurance policies were issued,” Uy said.
“Further, the Commissioner did not take any action to resolve the administrative complaints filed with them several years ago,” he said.
Uy noted that, “The Rules of Procedure adopted by the IC provides that “[u]nless a different period is fixed by special law, all contested cases or incidents shall be decided within thirty (30) days from the date of submission for resolution.”
“The first fire complaint was submitted by IC for resolution on July 13, 2015 or six years after the filing of the Complaint, while in the second case, SCP has already filed several motions for resolutions which remain pending,” he said.
He pointed out that, “In March 2011, fifteen months after the second fire and despite the categorical written certifications and statements by the loss adjusters, the Bureau of Fire Protection and a foreign forensic expert ruling out arson, gross negligence and fraud on SCP’s part, the insurers denied SCP’s claims.”
“All of a sudden and without filing a Comment on the Petition for Mandamus, on August 26, 2016, SCP’s counsel received a Decision in the first administrative case (2009 Fire) dismissing SCP’s complaint and finding that ‘respondents have shown that they performed and attempted in good faith to effectuate prompt, fair and equitable settlement of claims,’” Uy said.
“Then on September 21, 2016 and still without a Comment on the Petition for Mandamus, SCP received an Order dated September 16, 2016 issued by the IC in the second administrative complaint (2009 Fire). The Order instantaneously resolved all pending incidents and warned that no motion for reconsideration on this Order shall be considered to expedite this case and in view of the summary nature of the proceeding.”
Curiously, the IC now suddenly invokes the “summary” nature of the proceedings before it, after sitting on it for two years,” he said.
Uy said that, “Likewise, to enforce its valid claims against the insurance companies, SCP filed on March 30, 2015 with the Regional Trial Court of Makati two separate complaints for sum of money. Both cases have not even reached the pre-trial stage.”
He said that, “In July and August 2016, SCP sought the assistance of the IC regarding the identities of the reinsurers of the insurance companies in the second fire. Unfortunately, until today, no report has been produced neither by the IC nor by the insurance companies.”
“This fact makes it highly doubtful if the above insurance companies had any reinsurance support when they issued the insurance policies, thus their tactic to delay and wear down the insured in the claims process,” he said.
According to Uy, “fire damaged a small part of the plant’s CRM” in Barangay Munting Tubig in Balayan town on June 8, 2008.
“The insurers in the first fire incident were UCPB General Insurance Corporation, Oriental Assurance Corporation, PNB General Insurers Co., Inc. and Equitable Insurance Corporation,” he said.
On Dec. 7, 2009, “fire again broke out at the premises of SCP, and this time the fire completely burned the entire SCP,” he said.
“Mapfre Insular Corporation, Philippine Charter Insurance Corporation (now known as Charter Ping An Insurance Corporation), Standard Insurance Corporation, Asia Insurance Phils. Corporation, New India Assurance Co., Ltd. and Malayan Insurance Co., Inc. were the insurers during the second fire incident,” Uy said. “The 2009 fire policy was brokered personally by Victorio Valledor, President and CEO of Lockton Phils. Insurance and Reinsurance Brokers, Inc.”
