COA rules against insurance firms on P1.5-billion claim vs Pag-IBIG Fund

MANILA, Philippines – The Commission on Audit (COA) has ruled against a group of private insurance companies on a petition that the Home Development Mutual Fund (HDMF) or Pag-IBIG Fund should remit P1.503 billion in insurance premiums connected to a 1985 deal that ended in 2013. 

In an en banc decision, the COA upheld the government corporation’s arguments that the insurance firms’ petition was defective.

“The petitioners failed to submit authenticated copies of the decisions, orders, arbitral award, and supporting documents. The veracity of the money claim is questionable and cannot be ascertained,” the COA said. 

The dispute goes way back to 1985 when Pag-IBIG Fund entered into a Group Insurers Combined Fire Insurance Policy with the group of insurance firms or “insurance pool” which placed all properties mortgaged to Pag-IBIG under mandatory insurance coverage against fire and other risks.

In October 2013, then-Pag-IBIG chief executive officer Darlene Marie Beberabe (now the Solicitor General) notified the insurance firms that Pag-IBIG would terminate the fire insurance coverage once the contract ends on December 31, 2013.

The insurers opposed the move and sought arbitration.

In May 2016, an arbitration committee ruled, among others, that Pag-IBIG “validly exercised its right on behalf of its borrowers to no longer renew any existing individual one-year insurance policies under the 1985 Group Policy.”

It also held that Pag-IBIG Fund “validly exercised its right to no longer enroll new borrowers under the 1985 Group Policy.”

The insurance pool includes: 

• AFP General Insurance Corporation
• Allied Bankers Insurance Corporation
• Alpha Insurance & Surety Co. Inc. 
• Asia United Insurance Inc. 
• BF General Insurance Company Inc.
• Centennial Guarantee Assurance Corporation 
• Charter Ping An Insurance Corporation 
• Commonwealth Insurance Company
• Country Bankers Insurance Corporation 
• Empire Insurance Company 

• First Integrated Bonding & Insurance Co. Inc. 
• FLT Prime Insurance Corporation
• Fortune General Insurance Corporation
• Great Domestic Insurance Company of the Philippines Inc. 
• Intra-Strata Assurance Corporation
• Investors Assurance Corporation
• Liberty Insurance Corporation
• Manila Surety & Fidelity Co. Inc.
• Milestone Guaranty & Assurance Corporation 
• Meridian Assurance Corporation

• Metropolitan Insurance Co. Inc.
• Monarch Insurance Co. Inc. 
• Northwest Insurance & Surety Co. Inc.
• Oriental Assurance Corporation
• Pacific Union Insurance Company 
• Perla Compania De Seguros Inc.
• People’s General Insurance Corporation 
• Philippine British Assurance Co. Inc.
• Philippine Fire & Marine Insurance Corporation
• Plaridel Surety & Insurance Company

• Pioneer Asia Insurance Corporation
• Pioneer Insurance & Surety Corporation 
• Pioneer Intercontinental Insurance Corporation
• Prudential Guarantee & Assurance Inc.
• R&B Insurance Corporation 
• Reliance Surety & Insurance Co. Inc.
• Republic Surety & Insurance Co. Inc.
• Stronghold Insurance Co. Inc.
• The Premier Insurance & Surety Corporation
• The Solid Guaranty Inc.

• Travelers Insurance & Surety Corporation 
• UCPB General Insurance Co. Inc. 
• Western Guaranty Corporation.

In 2017, Pag-IBIG held a bid for the selection of a broker to manage its non-life insurance portfolio. This was awarded the following year to Lockton Philippines Insurance and Reinsurance Brokers Inc.

Two years later or in April 2019, the “insurance pool” wrote to then-Pag-IBIG CEO Acmad Rizaldy Moti seeking remittance of supposed unpaid premiums totaling P1,502,715,628.97 “as an amicable settlement between the parties.”

In May 2023, the insurance pool filed the petition with the COA asking it to compel Pag-IBIG to release P1.503 billion as settlement.

The COA, in its decision, said the arbitration ruling was strictly limited in scope to policies of insurance that were issued or renewed, with no obligation on the part of Pag-IBIG.

“In fact, the Arbitration Committee does not grant any award of interest to either party considering that it has not made any monetary award in favor of either party. As correctly pointed out by HDMF, there is no specific monetary award to be enforced based on the clear terms of the arbitral decision,” the COA said. – Rappler.com