IC tightens rules on insurers’ bonds
The Insurance Commission (IC) has tightened oversight over bond issuances by nonlife insurers, focusing on guarantees tied to infrastructure projects and government-related transactions.
In two newly issued circulars, the IC ordered nonlife insurance companies authorized to act as surety to adopt stricter underwriting standards and submit more detailed reports on bonds issued for Department of Public Works and Highways (DPWH) projects, government agencies, courts and government-owned and controlled corporations (GOCC).
Surety companies are insurance firms that issue surety bonds, which are financial guarantees ensuring that a person or company fulfills a legal or contractual obligation to a third party.
The circulars aim to provide IC with a clearer picture of overall risk exposure and potential concentration of obligations among surety companies.
Insurers are now required to review and update existing bond underwriting guidelines, which must be approved by their Boards of Directors. Approved guidelines must be submitted by Jan. 15, 2026, and any subsequent amendments are due within 15 calendar days of Board approval.
Encrypted monthly reports through the IC’s online portal should also be submitted, including key details such as project titles, contract amounts, bond status, co-sureties and whether the bonds are fully secured.
For its part, the DPWH is expected to submit a one-time historical report covering all bonds issued from 2022 to 2025, amid heightened scrutiny following the flood control corruption scandal.
In effect, this would allow IC to have insight into insurers’ exposure to large public contracts and prevent concentration risks in the surety sector.
Meanwhile, bonds issued in favor of government agencies, instrumentalities, judicial authorities and GOCCs must include additional details such as the project or contract ID, project title, total contract amount and whether the bond is fully secured.
Monthly reports must be submitted within 30 calendar days following the end of each reporting month.
Judicial bonds, including bail bonds, remain subject to separate reporting requirements to the Supreme Court.
The IC has imposed a P5,000 penalty for failure to submit updated guidelines and for each day of delay in submitting reports.
