About three months ago, a friend of mine, back home in the province, started coming out in rashes all over his body. He saw a doctor who, quite naturally, decided that Atoy (not his real name) who was in his early sixties had somehow developed an allergy. When the allergy would not respond to treatment, and the itching became worse, and Atoy started to lose his appetite, and his blood pressure began to rise, the doctor gave up.  He told Atoy to come to Manila.

Atoy hates Manila, but when his wife put her foot down, he finally came to the big city.  He looked up a doctor who is the son of an old friend.

The doctor checked Atoy in at one of the best private hospitals in the country. A couple of specialists were called in.  After two days of tests, the verdict was kidney trouble.

Atoy was immediately placed in dialysis.  Not the machine.  Instead, there is this procedure where a liquid solution is introduced by gravity into the kidney, pretty much like pumping plasma into the blood.

Over four days, fifty one-liter bags of the liquid were used.  The results were dramatic. Everyday, there was a marked improvement. On the fifth day, Atoy was well enough to be released.  The rashes were gone, and his appetite was back. I couldn’t help thinking that there must have been some Divine intervention, but I was told it was simply modern medicine at its best. The bill was P30,000 in all (this is at 1990 price levels).

By no means is Atoy out of the woods.  In two weeks, he is to report back to the hospital to be hooked up, this time to the dialysis machine. Later on, it will be a weekly session.  And still later, the hook-up will be more frequent, until finally the treatment will no longer work.  Each treatment will cost P5,000.

The better way seems to be a transplant, as soon as possible.  There are two  problems: one, there is a world-wide dearth of donors, but this can be solved by transplanting a kidney from one of Atoy’s seven children; two, is the cost of the operation, at least P150,000, which Atoy cannot afford.

Here is where insurance could have come in.  If one is employed, there is, of course, Medicare (now Philhealth). Without meaning to belittle the program, Medicare benefits are, however, woefully insufficient to cover expenses for major ailments.

Any prudent person should supplement Medicare with a policy from the private sector. There is a wide variety of medical and hospital plans available.  There are policies which, following a fixed schedule, will pay for hospital room and board, surgery, anesthesia, operating room, physician’s post-operation visits, private nurse, miscellaneous supplies and ambulance service.  There are policies which pays fixed monthly sums regardless of what the actual medical expenses may be. Some policies cover against certain specified dreaded diseases.  Still some policies cover against cancer only.

The premium, of course, varies with the age of the insured and the plan chosen. But, there is a plan for whatever you can afford to pay. Some plans can be bought through the mail. Because of the proliferation of medical and hospital plans one should seek advice before buying a policy. The insurance broker is well-positioned to give excellent advice as he has access to the entire market, while the agent can only offer the plans of the company he represents.

Buying any policy is better that not buying at all. In this age of constantly rising medical costs, it is imprudent not to have some kind of medical insurance. And, you have to buy it when you are healthy.  When you are already sick, it is too late to buy.



When you buy a fire insurance policy, or any other policy for that matter, you get more than what you bargained for. The recent fire at the Shangri-la Plaza showed you what I mean.

The fire started at a lamp store on the fourth floor, maybe because the electrical circuit was overloaded. (You know how a lamp store turns on all their items on display.) The fire activated the overhead sprinklers in the store.  With the help of the fire department that answered the call, the fire was  put out before it could spread.

The fire policy pays not only for the things that were actually burned in the lamp store, but also for anything that was damaged by water used to put out the fire, and the ensuing smoke in the neighboring store. The smoke and water damage to the stocks in the two stores which are clients of my son Louie, are now being claimed under their respective fire policies.

The policy also covers losses incurred while trying to save what was insured against fire.

This expansion of the term “fire” is the result of a long process of evolution of the fire policy which is over 200 years old. It also follows the basic insurance principle of “proximate cause.” Simply put, this principle says that when there is an unbroken and logical chain of events from an insured peril (in this case, fire) to the uninsured peril (in this case, water or smoke) that is the final cause of the loss, then the loss is covered.

In Louie’s clients, the application of the principle is quite clear and direct.  But, in many cases, the chain of events is quite complicated that the principle is not so easy to apply.

Another thing.  The water and smoke damage must be traced to a fire that is covered under the policy.  The policy covers hostile fire.  It does not cover friendly fire.  When you strike a match, the flame at the end of the matchstick is friendly fire. If the flame sets a window curtain afire, then you have a hostile fire. A fire inside a stove is friendly. If the fire spread to the rest of the kitchen, you have a hostile fire. In short, a fire that is where it is intended to be is friendly; when you see a fire where it is not supposed to be, that fire is a hostile.

In the Shangri-la case, if the overhead sprinklers were accidentally set off by a friendly fire, the ensuing water damage would not be covered by the standard fire policy. But the insured could have the fire policy extended to cover water damage from sprinklers that are accidentally set off — at an additional premium, of course.

Expenses for clearing debris as a result of fire or any ensuing damage can also be covered at an additional premium.

By the way, a standard fire insurance policy also covers damage caused by lightning.

Finally, the standard fire insurance policy covers direct damage such as we have discussed above.  It does not cover so-called consequential loss, such as loss of earnings.  Which is an entirely different and rather complicated field of insurance altogether.

If you have a fire insurance policy, maybe it is time to ask your insurance broker to review it.



About a year ago, a client called up my son Jimmy, who is a full partner in my insurance broking firm.  The client said that he had just bought into a nine-story condominium and asked Jimmy to please arrange to insure the middle three floors.

What about the rest of the building, Jimmy asked.  He was told there were only two other owners. A bank owned the first three floors and a businessman the top three. Let us can them Top, Middle and Bottom.

Middle said the three owners had agreed that each would arrange the insurance on his respective portion of the building.  (I suspect many of the condominiums all over the country are insured this way.) Jimmy told the client that it should be the condominium corporation that should take out a policy on the entire building, the  premium to be shared proportionately by the unit owners.

Jimmy asked Bottom is he could handle the insurance on his share. Sorry, the policy had to be integrated into the bank’s insurance program.  Top said he was a major stockholder of an insurance company and he did not need an insurance broker.

Under the circumstances, Jimmy did the next best thing. He placed Middle’s order with Bottom’s insurance company. Jimmy figured that there would be fewer problems in case of a claim if there was only one company covering Middle and Bottom. Besides, our office was doing quite a bit of business with the company.

Jimmy also arranged that Middle’s policy should have the same  perils insured against as Bottom’s which were quite comprehensive anyway. The fire policy included extended cover (explosion, aircraft, vehicle and smoke), riot, strikes and malicious damage, and, finally, earthquake.

A big earthquake brought down the marble walls of the lobby.  The damage ran to several thousand pesos.  In insurance, the claim is looked at, not as a total loss of the marble walls, but as a  partial damage to the entire building.  The claim is computed in relation to the total value of, and the total insurance on, the building.

The adjuster found out that Top never insured his share.  The building then was underinsured by one-third its value. But this was a simple mathematical problem of ratio and proportion.

The big problem was that Middle’s and Bottom’ policies were not identical.  As Jimmy had rightly arranged it, Middle’s policy was on one-third of the building, not the middle floors as Middle originally ordered. On the other hand, Bottom’s policy was specifically on the first three floors which was wrong because the law says that he owned one-third of the building, not the first three floors.  The adjuster was faced with the mathematical impossibility.  For months, he wrestled with the problem.

Finally, Jimmy persuaded the company and the adjuster to compute the claim, not based on the wording of the two policies, which could never be reconciled, but on the joint intentions of Middle and Bottom to insure two-thirds of the building value.  As a result, Middle and Bottom were reimbursed their two-thirds share of the repairs. Top had to bear his one-third share on his own.

Although the imperfection in the two policies could have been used to deny the claims, the company agreed to pay because Bottom was a long-standing valued client and Middle was a client of a broker who had some clout with the company.  And, the claim was relatively small. Otherwise, there would have been hell to pay.

After the repairs were completed, the three owners agreed that one insurance policy by taken out by the condominium corporation for the full replacement value of the building, the premium to be shared by the owners on a pro-rate basis.  Jimmy got the order.



Whenever I feel bad over all the graft and corruption I hear going on in government today, I bring to mind the stirring saga of my late uncle and aunt who were in the civil service their entire adult lives.  Then, I feel good again.

Tata Peping studied medicine at the University of Santo Tomas before World War II. His widowed mother supported him by selling dried fish in the public market when Naga was a small backwater town in Camarines Sur.

The monthly allowance his mother could afford to send was so meager that making both ends meet in the big city of Manila was a constant struggle for Tata Peping. He could not afford to buy textbooks, so he spent all his spare time studying in the library.

There was one textbook he wanted to have. He copied the text and illustrations by hand.  If the Xerox copying machine had already been invented, he could not have afforded the  printing charges anyway. By the end of the semester, he had copied the entire book. This handwritten textbook is one of the treasures he left behind.

Because he had to do his own laundry, he made sure his white uniform would not get dirty so easily.  Before taking his place in the classroom, he would wipe his seat clean and cover it with Manila paper.

He went  to the public faucet before dawn to do his washing alongside the poor washerwomen.  Then, the washerwomen offered to wash his clothes for free.  All they asked in return was, “When you are already a doctor, please do not forget us.”

Tata Peping never did.  He worked all his life as a surgeon at North General because it was the hospital of the poor washerwomen who did his washing. He never passed the chance of treating charity cases. He was the surgeon of the  poor.

With Spanish blood in him, he was good-looking but soft-spoken. He always had a trace of a smile on his face. He was an all-around nice guy. He did not have an enemy in the world. Everybody at North General called him Tatang.

Tata Peping’s wife, Nana Zeny, who came from a middle-income family in Albay, was two years behind him in medical school. After passing the board exams, she joined the Department of Health. She rose to become director of regulation and licensing, where there were ample opportunities for making dirty money on the side. She never touched the stuff.

The couple bought two adjoining units in one of the government low-cost housing projects in Quezon City. The furnishings were modest. This is where they raised their son and two daughters who all went to medical school, and where they spent their lives together.

Tatang Peping bought a second-hand car.  It was so old it was no longer insurable, except against third party liability. Always careful, he drove the car at way below maximum allowable speed. But I guess he was also afraid that if he drove fast, the car would break up.

Tata Peping passed away peacefully at retirement nine years ago. Nana Zeny followed him soon after.  They’re buried side by side in a memorial park in Novaliches. No aboveground monument marks their resting place.

I am absolutely certain Saint Peter threw the pearly gates wide open and greeted them, “Well done!  Enter into your Father’s Kingdom.”

I am also absolutely sure that there are thousands of Tata Pepings and Nana Zenys in government today, working and slaving by serving the people, inspite of the temptations for graft and corruption around them. This why I believer this country of ours, in the end, will be okay.


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