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PRESIDENTIAL DECREE NO. 245
PRESIDENTIAL DECREE NO. 245 -
AMENDING Section THREE OF REPUBLIC ACT NUMBERED SIX HUNDRED AND
FIFTY-SIX, OTHERWISE KNOWN AS THE "PROPERTY INSURANCE LAW", AND OTHER
PURPOSES
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WHEREAS,
under Republic Act 656, the Property Insurance Fund was established and
placed under the administration of the Government Service Insurance
System, which Fund is separate, segregated, and distinct from the trust
funds of government employees comprising the Life Insurance Fund and
the Retirement Insurance Fund as established by Commonwealth Act 186,
as amended, and from the Medicare Fund as established by Republic Act
6111;chanroblesvirtualawlibrary
WHEREAS, the Property Insurance Fund was established "in order to
indemnify or compensate the Government.from any damage to, or
loss of, its properties due to fire, earthquake, storm, or other
casualty";chanroblesvirtualawlibrary
WHEREAS, in spite of the provisions of Republic Act 656, the bulk of
the insurable assets and properties of the Government worth about P4
Billion remains uninsured, thus exposing the Government to unnecessary
losses in the event of damage to, or loss of, such assets and
properties;chanroblesvirtualawlibrary
WHEREAS, the non-insurance of such government assets and properties is
due in part to the limited capacity of private domestic non-life
insurance companies to accept the reinsurance of large risks from the
GSIS, considering that the combined net worth of private domestic
non-life insurance companies in the country is approximately
P200,000,000, not more than ten per centum (10%) of which represents
their maximum retention capacity on any single risk in accordance with
law;chanroblesvirtualawlibrary
WHEREAS, in view of the limited capacity of local non-life insurance
companies to absorb the reinsurance to be ceded by the GSIS in the
event that it insures a large portion of the existing insurable assets
and properties of the Government, it is necessary for the GSIS to
develop its capacity to cede reinsurance abroad;chanroblesvirtualawlibrary
WHEREAS, considering that the placement or reinsurance abroad by the
GSIS entails foreign exchange outflows in the form or reinsurance
premium payments, it is desirable, from the country's point of view for
the GSIS likewise to have the powers, authority, and capacity to accept
inward reinsurance from abroad and thus earn foreign exchange for the
country by way of premium earnings;chanroblesvirtualawlibrary
WHEREAS, in a multitude of cases, shipments to and from the Philippines
are insured by foreign insurance companies rather than Philippine
companies in view of the limited capacity of the domestic insurance
industry to cover such risks and to denominate the corresponding
insurance policies in foreign exchange, which in many cases, is imposed
as a requirement by the suppliers of Philippine imports or the buyers
of Philippine exports;chanroblesvirtualawlibrary
WHEREAS, there are Philippine contractors undertaking work in foreign
countries who are required to present surety or performance bonds
denominated in foreign exchange, and who find it necessary to have such
bonds issued by foreign insurance companies, thereby contributing to
the foreign exchange outflows from the country in the form of premium
payments;chanroblesvirtualawlibrary
WHEREAS, the rectification of the impediments cited above will not only
save but will also earn foreign exchange for the country and, at the
same time, place principal government assets, properties, and
installations under adequate insurance protection;chanroblesvirtualawlibrary
WHEREAS, such impediments can be rectified by authorizing the Property
Insurance Fund established by Republic Act 656 to cede and receive
reinsurance placements within the Philippines and abroad; to issue
policies, surety and/or performance bonds denominated in foreign
exchange; and to perform all acts necessary and/or incidental to such
functions;chanroblesvirtualawlibrary
WHEREAS, the powers and authority granted herein to the GSIS will not,
in any way, diminish the business conducted by domestic insurance
companies, but on the contrary, will increase the total volume of
insurance transactions in which private insurance companies shall
participate through increased reinsurance cessions and retrocessions to
them by the GSIS;chanroblesvirtualawlibrary
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines,
by virtue of the powers vested in me by the Constitution as
Commander-in-Chief of all the Armed Forces of the Philippines and
pursuant to Proclamation No. 1081 dated September 21, 1972, and General
Order No. 1, dated September 22, 1972, as amended, do hereby decree and
order the amendment of Section 3, Republic Act Numbered Six hundred
fifty-six, otherwise known as the "Property Insurance Law", to read as
follows: chanroblesvirtualawlibrary
"Sec. 3. For the effectuation of the purpose of this
Act, the Administration of Fund is hereby placed under the Government
Service Insurance System with the following authority: (a) to engage in
the business and operation of all kinds of insurance and reinsurance
and all other forms of undertaking to indemnify any person or party
against loss, damage, or liability, including third party liability,
arising from unknown or contingent events, except life insurance,
subject to pertinent Central Bank rules, regulations and policies; (b)
to reinsure with and accept reinsurance from insurance and reinsurance
companies in the Philippines and abroad, under such terms and
conditions that may be mutually agreed upon, any excess risk the System
may deem advisable, subject to pertinent Central Bank rules,
regulations and policies; (c) to issue policies denominated in any
foreign currency, provided that a certain minimum percentage to be
determined by the System in consultation with the Insurance Commission
shall be reinsured abroad and provided that the Fund's liability in any
foreign currency shall be covered by a minimum amount of foreign
exchange assets, which may include forward purchases of foreign
exchange from the Central Bank, in accordance with rules and
regulations to be formulated by the System in consultation with the
Insurance Commission and subject to pertinent Central Bank rules,
regulations and policies; (d) to issue surety and/or in any performance
bonds both in Philippine peso and/or in foreign currency, provided that
the amount of the bond to be issued on any one risk or undertaking
shall be limited to ten per centum (10%) of the net worth of the
Property Insurance Fund, and that the excess over said limit shall be
reinsured with domestic and/or foreign insurance and reinsurance
companies; Provided, That the Fund's bonding exposure in any foreign
currency shall be covered by a minimum amount of foreign exchange
assets in accordance with rules and regulations to be formulated by the
System in consultation with the Insurance Commission subject to Central
Bank rules, regulations and policies; (e) to insure all insurable
assets serving as collaterals for loans extended by government
financial institutions not otherwise authorized to issue insurance
policies; (f) to prescribe necessary rules and regulations, including
such incidental powers as are necessary for its operation; (g) to
appoint personnel, who are certified as eligibles by the Civil Service
Commission, prescribe their duties, and fix their remuneration. Section
fifteen of Commonwealth Act Numbered One hundred eighty-six shall not
be applicable to the personnel of the Fund.
To reflect faithfully the functions of the Fund in accordance with this
decree, the Property Insurance Fund shall henceforth be known as the
General Insurance Fund.
All laws, orders, proclamations, rules and regulations, or parts
thereof, which are inconsistent herewith are hereby repealed or
modified accordingly.
This Decree shall take effect immediately.
Done in the City of Manila,
this 13th day of July, in the year of Our Lord, nineteen hundred and
seventy-three.
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