In the Philippine insurance industry, the principle of uberrimae fidei (utmost good faith) governs the relationship between the insurer and the insured. When an insurance company or its agents employ misleading sales practices—often referred to as "misselling"—they violate this principle and the regulatory standards set by the Insurance Commission (IC).

Under Republic Act No. 10607, otherwise known as the Insurance Code, the state mandates that the insurance business be regulated to protect the public interest. Misleading practices can range from misrepresenting policy benefits to "churning" (persuading a client to terminate an existing policy to buy a new one solely for commission).

Common Forms of Misleading Sales Practices

Misrepresentation of Benefits: Falsely claiming that a traditional life insurance product is a "savings account" or "time deposit" with guaranteed high returns.
Concealment of Charges: Failing to disclose premium charges, surrender charges, or the inherent risks involved in Variable Universal Life (VUL) policies where the fund value is subject to market volatility.
Twisting: Inducing a policyholder to lapse or surrender their current policy through misrepresentation to replace it with a new one from a different insurer.
Rebating: Offering illegal inducements (like a portion of the commission) to close a sale, which is prohibited under the Insurance Code.

The Legal Basis for Complaints

Complaints are primarily grounded in the following legal frameworks:

The Insurance Code (RA 10607): Section 370 prohibits any person from making, issuing, or circulating any estimate, illustration, circular, or statement misrepresenting the terms of any policy issued.
The Consumer Act of the Philippines (RA 7394): Protects consumers against deceptive, unfair, and unconscionable sales acts and practices.
Financial Products and Services Consumer Protection Act (RA 11765): A more recent law providing the IC with expanded powers to adjudicate complaints and impose sanctions on financial service providers for unfair treatment of consumers.

Procedural Steps for Filing a Complaint

If you believe you have been a victim of misleading sales practices, the following steps are generally observed:

1. Exhaustion of Internal Remedies

Before escalating to the regulator, you must first file a formal complaint with the insurance company's Internal Complaint Handling Mechanism or their Compliance Office. Request a written explanation or a resolution (such as a premium refund or policy reinstatement).

2. Filing with the Insurance Commission (IC)

If the company fails to resolve the issue, you may approach the Public Assistance and Mediation Division (PAMD) of the Insurance Commission.

Requirements:
A formal letter of complaint (or a filled-out IC Complaint Form).
Copy of the Insurance Policy.
Evidence of misrepresentation (e.g., marketing brochures, screenshots of messages from the agent, or recordings).
The company's final response (if any).

3. Mediation and Adjudication

The IC process typically follows two stages:

Mediation: An informal conference where an IC mediator helps both parties reach a settlement.
Adjudication: If mediation fails, the case may proceed to formal adjudication. The IC has the power to hear and decide cases where the amount of actual damages claimed (excluding interest and attorney's fees) does not exceed PHP 5,000,000.00.

Possible Remedies and Penalties

Upon a finding of misleading practices, the Insurance Commission or a court of law may grant several forms of relief:

Rescission of Contract: The policy is voided, and the insurer may be ordered to refund all premiums paid.
Administrative Fines: The insurer or the agent may be fined based on the schedule of fees provided by the IC.
Suspension or Revocation of License: Agents found guilty of "twisting" or gross misrepresentation may have their licenses permanently revoked.
Damages: In cases filed before the regular courts, the aggrieved party may seek actual, moral, and exemplary damages.

Important Considerations: The "Free Look Period"

It is important to note the Free Look Period (usually 15 days from the receipt of the policy). During this window, the policyholder can review the terms and, if they find the product was misrepresented, return the policy for a full refund. Failing to act within this period does not waive your right to file a complaint for fraud, but it may shift the burden of proof more heavily onto the complainant.