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Insurance Commission issues cease and desist order vs. BFPMBAI

business / Corporate
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Insurance Commission issues cease and desist order vs. BFPMBAI

By: - Reporter / @bendeveraINQ
/ 10:52 AM September 15, 2017

The Insurance Commission (IC) has ordered to stop the operations of  BFP Mutual Aid Beneficiary Association Inc. (BFPMBAI).

In a statement Friday, Insurance Commissioner Dennis B. Funa said that in a Sept. 8 resolution, he affirmed the IC’s earlier decision to issue a cease and desist order against the Quezon City-based BFPMBAI.

Funa said the cease and desist order “stemmed from the administrative complaint filed against BFPMBAI by Fire Services Mutual Benefit Association Inc. (FSMBAI), a duly-licensed mutual benefit association (MBA) whose primary purpose is to provide for the payment of benefits exclusively to its members and their dependents.”

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FSMBAI groups officers, employees as well as retirees of the Bureau of Fire Protection and also Department of the Interior and Local Government personnel.

“Based on the formal administrative complaint and documentary evidence presented by FSMBAI, the IC found substantial proof showing that BFPMBAI is acting as an MBA, albeit the lack of necessary license from the IC,” Funa said.

“Considering that BFPMBAI is not a licensed MBA, it is neither entitled to operate as such nor perform acts necessary and/or incidental to the operation of an MBA including, but not limited to, collection of contribution/premiums from its members, payment of benefits and issuing insurance certificates,” Funa added.

Besides the cease and desist order, the IC also slapped BFPMBAI a fine of P200,000.

“With the affirmation of the issuance of the cease and desist order against BFPMBAI, we expect that BFPMBAI will comply with the same. Otherwise, the same will warrant the imposition of administrative sanctions, including citing the company for contempt, and the filing of criminal charges against the individuals responsible for the defiance of the cease and desist issued,” according to Funa.

BFPMBAI may still file before the Secretary of the Department of Finance a notice of appeal within 15 days from receipt of the order, Funa said.

“Similar to life and non-life insurance companies, our Insurance Code requires mutual benefit organizations to secure a license from the IC before they can actually operate as such. It should be noted that an MBA is defined under the Insurance Code, thus, its creation and operation must be governed by the Insurance Code,” Funa noted.

The Insurance Code defines an MBA as “a non-stock and non-profit organization which is primarily organized for the purpose of paying sick benefits to members, or of furnishing financial support to members while out of employment, or of paying to relatives of deceased members of fixed or any sum of money, irrespective of whether such purpose is carried out by means of fixed dues collected regularly.”

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Also, an MBA “provides for payment of accident or life insurance business, by the issuance of certificates of insurance, out of such regular dues or assessments.”

At present, 35 MBAs are operating under licenses issued by the IC.

Funa also warned the public “against dealing with unlicensed entities offering insurance, pre-need and HMO [health maintenance organization] products.”

“The insurance, pre-need and HMO businesses are being regulated by the IC. These business are required to obtain a license from the IC, otherwise their business is illegal. The general public can check the IC website at www.insurance.gov.ph for the lists of licensed insurers, pre-need companies and HMOs,” Funa said.

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TAGS: BFP Mutual Aid Beneficiary Association Inc., Insurance, Insurance Commission, mutual benefit association
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