Commercial and Taxation Laws › Insurance Law (PD 612, as amended by RA 10607)
J. Reinsurance
K. Reinsurance
R.A. No. 10607, Sections 97-100
"REINSURANCE
"Section 97. A contract of reinsurance is one by which an insurer procures a third person to insure him against loss or liability by reason of such original insurance.1
"Section 98. Where an insurer obtains reinsurance, except under automatic reinsurance treaties, he must communicate all the representations of the original insured, and also all the knowledge and information he possesses, whether previously or subsequently acquired, which are material to the risk.2
"Section 99. A reinsurance is presumed to be a contract of indemnity against liability, and not merely against damage.3
"Section 100. The original insured has no interest in a contract of reinsurance.4
Reinsurance
One by which an insurer procures a third person to insure him against loss or liability by reason of such original insurance. In every reinsurance contract, the original contract of insurance and the contract of reinsurance are separate and distinct and covered by separate policies.
Insurance vs. Reinsurance
| INSURANCE POLICY | REINSURANCE |
| Written document embodying the terms and stipulations of the contract of insurance between the insured and insurer. | Any contract by which an insurer procures a 3rd person to insure him against loss or liability by reason of an original insurance. |
| Formal written instrument evidencing the contract of insurance. | The original contract of insurance and the contract of reinsurance are covered by separate policies. |
Reinsurance v. Double Insurance
| DOUBLE INSURANCE | REINSURANCE |
| Involves the same interest. | Insurance of different interests. |
| Insurer remains in such capacity. | The direct insurer becomes the insured in relation to the reinsurer. |
| Insured in the 1st contract is a party in interest in the 2nd contract. | Original insured has no interest in reinsurance contract. |
| Subject is the same person or property and the same insured interest, covered by two or more insurers. | Subject of insurance is the original insurer’s risk. |
| Consent of the insured is not a general requirement for double insurance; comply with any applicable policy condition on other insurance. | Consent of original insured, not necessary. |
The reinsurance contracts were correctly issued in favor of Plaridel. By its nature, reinsurance contracts are issued in favor of the direct insurer because the subject of such contracts is the direct insurer’s risk, in this case, Plaridel’s contingent liability to MSAPL, and not the risk assumed under the original policy. With or without reinsurance, the obligation of the surety to the party against whom writ of attachment is issued remains the same (Communication and Information Systems Corporation v. Mark Sensing Australia Pty. LTD, G.R. No. 192159, 25 January 2017)6.
Authorities
- Communication v. Mark Sensing Australia Pty. LTD, G.R. No. 192159, 25 January 2017
- R.A. No. 10607, Sec. 100
- R.A. No. 10607, Sec. 97
- R.A. No. 10607, Sec. 98
- R.A. No. 10607, Sec. 99