LIFE insurance coverage in the Philippines is one of the lowest in the Asean region.
This may be attributed to, among others, the public’s unwholesome impression of insurance agents—they’re around when premiums are still being paid, but are nowhere to be found when claims are made.
To aggravate matters, the fine print of the insurance policy is often cited to justify the denial or diminution of legitimate demands for payment of insurance benefits.
In a recent decision, “Bank of the Philippine Islands and FGU Insurance Corporation vs Yolanda Laingo, G.R. No. 205206, dated March 16, 2016,” the Supreme Court passed upon the issue of notice of insurance claims.
The case involves Rheozel, the son of Laingo, who opened in 1999 a “Platinum 2-in-1 Savings and Insurance” account in a BPI branch in Davao City. The bank account had an automatic insurance coverage for disability or death.
The personal accident insurance policy was issued by FGU in the name of the depositor with Laingo as beneficiary.
In 2000, Rheozel died in a vehicular accident. To defray her son’s funeral and burial expenses, Laingo withdrew a substantial sum of money, with the bank’s consent, from her son’s bank account.
Beneficiary
More than two years later, or in January 2003, Laingo’s daughter, while arranging Rheozel’s private papers, saw the insurance policy issued by FGU.
Laingo immediately wrote to BPI and FGU requesting them to process her claim as beneficiary under the policy. FGU denied her claim on the ground that it was filed beyond three calendar months from her son’s death, contrary to the requirement of the policy which states that: “Written notice of claim shall be given to and filed at FGU Insurance Corporation within three calendar months of death or disability.”
In the wake of this rejection, Laingo filed a complaint for damages against BPI and FGU at the Davao City regional trial court. The court ruled against her and said the 90-day notice should be counted from the date of the death of the insured and not from the knowledge of the beneficiary.
Laingo appealed the ruling to the Court of Appeals. The latter reversed the trial court. It said Laingo cannot be expected to perform an obligation that she did not know existed.
Besides, since she is not a party to the insurance contract between her son and FGU, she cannot be bound by the 90-day period. Accordingly, the appellate court held BPI and FGU liable for damages to Laingo.
In addition, FGU was ordered to pay the proceeds of the insurance policy with 12 percent interest from the date Laingo filed the complaint in 2004.
With this rebuff, BPI and FGU elevated the case to the Supreme Court for final resolution.
Processing
The issue before the tribunal was whether or not Laingo, as the named beneficiary who had no knowledge of the existence of the insurance contract, is bound by the three calendar months deadline for filing a written notice of claim upon the death of the insured.
The justices took note of the fact the deposit account with life and disability insurance coverage was “a marketing strategy promoted by BPI in order to entice customers to invest their money with the added benefit of an insurance policy.”
For this purpose, BPI tied up with FGU, an affiliate company, for the automatic grant of insurance coverage to its depositors upon the submission of the required documents.
With this arrangement, BPI acted as agent of FGU for the insurance feature of its marketed product.
Thus, BPI took care of facilitating the collection of the necessary insurance documents and the approval of the insurance coverage without Laingo’s son interacting, directly or indirectly, with FGU over the insurance coverage.
It was also proven that when Laingo dealt with BPI in connection with her request to withdraw money from her son’s bank account, the latter did not inform her that the account was accompanied by an insurance policy.
Responsibility
Citing an earlier ruling on the law on agency, the tribunal said “when an agency relationship is established, the agent acts for the principal insofar as the world is concerned.
“Consequently, the acts of the agent on behalf of the principal within the scope of the delegated authority have the same legal effect and consequence as though the principal had been so acting in the given situation.”
In the instant case, BPI, in its capacity as FGU’s agent, had the primary responsibility to ensure the insurance feature of the bank deposit was reasonably carried out.
It was therefore BPI’s obligation to give proper notice about the existence of the insurance policy to its beneficiaries, including the requirement in the insurance contract to file a notice of claim within the 90-day period.
The justices further stated that since BPI had been informed of the death of Laingo’s son, and BPI is the agent of FGU, such notice of death to BPI is considered as notice to FGU also.
Thus, FGU “cannot now justify the denial of a beneficiary’s insurance claim for being filed out of time when notice of death has been communicated to its agent within a few days after the death of the depositor-insured.”
With these findings, the tribunal affirmed the earlier order of the appellate court holding BPI and FGU liable for damages and attorney’s fees, and FGU obliged to pay the proceeds of the insurance policy.
Word of advice to persons with death or disability insurance policies, whether on stand alone basis or as part of a bank account or other financial instruments: Give a copy of the policy to your named beneficiary and tell him what to do in case (knock on wood) the inevitable happens.
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