Regulator hears PGA complaint vs Marsh UK
The Insurance Commission (IC) on Tuesday conducted a mediation hearing on a local insurer’s grievance against Marsh UK but declined to provide details on how the proceedings went.
Prudential Guarantee and Assurance, Inc. filed a formal complaint in October, following up on accusations that Marsh — which it had formerly tapped as a reinsurance broker — had broken Philippine laws.
“The complaint was alleged violation of the Insurance Code but as for the specifics of the particular provision being allegedly violated… we cannot divulge [these],” IC Regulator, Enforcement and Prosecution officer-in-charge Brian Sibuyan told The Manila Times.
Prudential Guarantee, through lawyer Jose Antonio Bernas, earlier this year claimed that the head of Marsh Singapore personally solicited business from carrier Cebu Air in behalf of Marsh UK, in the process breaking local laws and also disclosing privileged information.
Cebu Air was reportedly offered a reinsurance package where Marsh would assume all insurance risks through a “fronting insurer”, a matter Bernas claimed Marsh all but admitted in a letter to the IC where it said it was now able to compete against other local insurance firms.
Prudential Guarantee also asked the IC to consider revoking the license of Marsh’s Philippine unit but the Commission said the matter should follow rules of procedure.
Sibuyan said in this kind of case, the commission would take a maximum of one year before coming up with a resolution.
“We will still assess all the matters that will be presented by both parties because as early as now, it would be too early to prejudge. It will really depends on the evidence resented by both parties,” he said.
The IC also directed Prudential Guarantee and Marsh representatives not to disclose any information regarding the hearing.
“We directed both parties not to divulge any matter that was discussed during the proceeding. Considering that the case is pending, so we might as well dwell on the matter through the proceeding rather than discussing this publicly because this might create an impression to the public,” Sibuyan said.
“There might be prejudgement or it might preempt how we will proceed with this particular case,” he added.
In a statement on Tuesday, meanwhile, Prudential Guarantee said the IC specifically discussed the practice of using Filipino “fronting insurers” in order to do business in the Philippines.
For the insurance needs of a leading airline, it claimed that Marsh had appointed Pioneer Insurance as its “fronting insurer” while they would assume all the insurance risks and liabilities.
Citing Section 100 of the Amended Insurance Code, Prudential Guarantee said that a reinsurance broker can only tender brokerage services to an insurer and cannot offer insurance brokerage nor insurance services directly to a client.
“Moreover, the same section states that the original insured would have no cause of action to recover insurance proceeds from the reinsurer. Conversely, the reinsurer is not liable to the original insured, since they are not a cosigner of the policy issued,” it said.
PGA’s Bernas noted that besides violating the Insurance Code, the dispute is a clear case of doing business in the Philippines without a license.
“It isn’t our place to tell others how to do their business or to critique how they cover risks as a business decision. However we believe that Marsh is operating illegally in the Philippines and the IC should do something about in order to protect the industry and to assure that the insured will be protected,” he emphasized.
“Since the insurer in this case is only a front, what happens if the reinsurance company refuses to pay a claim? Using a ‘fronting insurer’ invites all sorts of risks, and that’s precisely why the IC has clear guidelines about the role each company plays,” he further added.
“We always welcome dialogue with the Insurance Commission in order to provide insights that will help aid policy formation. It was therefore a bit confusing that they termed today’s meeting with Marsh representatives as a ‘mediation meeting’.”
Marsh is also being investigated by the United Kingdom’s Financial Conduct Authority for allegedly sharing confidential information.