Published 21 May 2021, The Daily Tribune

Facing rejection is a hard reality in itself, what more when such rejection is coupled with discrimination?

We know that an application for life insurance is not an automatic right. An insurance company has the prerogative to decline an insurance application depending on its underwriting guidelines.

Underwriting is a complex process that requires reliance on sensible judgment and meticulous attention to detail in an effort to identify the risks posed by an insurance applicant. Simply, it is the preliminary step to determine an applicant’s eligibility for life insurance coverage.

Among the most common reasons for rejecting a life insurance application are pre-existing medical conditions. If not rejection, insurance companies may require the applicant to pay a higher premium, or accept a lower death benefit.

Certainly, insurance companies have a leverage in accepting or declining an application. More so, when a life insurance applicant has pre-existing conditions.

To temper the wide discretion that insurance companies have, the Insurance Commission (IC) issued Circular 2020-86 last 27 August 2020, which provides guidelines to protect persons with disabilities (PWD) from any form of discrimination in the insurance industry.

In upholding the different roles of the country in the United Nations Convention on the Rights of Persons with Disabilities, Circular 2020-86 was issued by the IC to instruct all insurance companies not to discriminate against potential clients who are identified as PWD.

Adherence to the Magna Carta for Disabled Persons

Circular 2020-86 cites Sections 35(f) and 36 of Republic Act (RA) 7277, otherwise known as the Magna Carta for Disabled Persons, which prohibit the discrimination of PWD in public accommodations and services.

The insurance industry was, thus, reminded to comply with and be mindful of the mandates of the pertinent provisions of RA 7277. (Section 1)

No Discrimination

The heart of the Circular 2020-86 provides that there shall be no outright declination or refusal of any application to be covered by any insurance contract solely on the ground of disability. (Section 2)

Transparent Underwriting Process

The Circular also provides that underwriting process should be disclosed to any applicant, whether a PWD or not, upon request for purposes of transparency and the “utmost good faith” component of all insurance contracts. (Section 2)

To recall, the doctrine of “utmost good faith” refers to the duty of both the insurer and insured to exercise honesty in dealing with each other. Both parties are obligated to declare all facts that are considered material to the contract of insurance.

Reasonable Premiums

In the process of underwriting, the amount of premium is determined through the risks the applicant poses, which may include lifestyle, family history, and medical conditions. As mentioned, applicants with pre-existing medical conditions may be required by insurance companies to pay a higher premium.

Thus, the Circular protects PWD applicants by allowing them to have the opportunity to either accept or decline the premium that the insurers may offer. (Section 3)

Circular 2020-86 also reminds insurance companies that the assessment of risks and the corresponding formulation of premium for a PWD applicant must be reasonable. According to the Circular, a premium is to be deemed reasonable if there is an information or data relied upon by the insurer that is relevant to the applicant. (Section 4)

The Circular also instructs insurers to be prepared and explain to the applicant the basis for their decision. (Section 4)


Insurance companies violating Circular 2020-86 shall be held administratively liable and shall be penalized with a fine of up to two hundred thousand pesos (P200,000.00). (Section 6)

Worse, violators of the Circular may face suspension or revocation of their Certificates of authority, or any form of license or authority granted by the IC. (Section 6)

Applicability of Insurance Code

Despite the specificity of Circular 2020-86 to PWD, the Circular applies all other legal provisions, concepts, principles and allowed practices such as, but not limited to, insurable interests, material concealment, preexisting conditions, fraud, legal effects in case of non-payment of premiums; other pertinent provisions in RA 10607, or the amended Insurance Code; and other existing applicable laws. (Section 5)

Role of PWD

Circular 2020-86 not only penalizes discrimination, it also highlights the role of PWD in the national social and economic development. To quote IC Commissioner Dennis Funa:

“We need to break the perception that having a disability is a disadvantage. On the contrary, our PWD play a role in our Philippine economic development as we move into a more integrated and inclusive society. All the more that they should be afforded insurance coverage.”

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