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Before
the month ends, a new car-insurance system formulated by
the Department of Transportation and Communications,
Government Service Insurance System (GSIS) and other
agencies will be in place.
The new
Comprehensive Third- Party Liability (CTPL) scheme, its
proponents say, seeks to cure the many problems that
have afflicted the mandatory auto-insurance business in
this country for the past three decades or so.
Critics
claim, however, that through the new system the GSIS
would monopolize the auto-insurance business. It would
also displace thousands of insurance agents and others
who depend on the old third-party liability (TPL) scheme
in place since the early 1980s.
What are
the facts?
For one
thing, an independent study showed that of 92 licensed
companies, the TPL business has been cornered by just
nine companies.
For
another, most legitimate insurance agents shy away from
vending TPL policies since the law limits their
commissions to just 10 percent, while those from other
insurance lines range from 25 percent to 30 percent.
If the
earnings from selling auto TPL policies are so measly,
why, then, are some quarters desperately trying to
derail the new CPTL the GSIS will soon implement on
behalf of the Land Transportation Office (LTO)?
Again,
let the facts speak for themselves, proponents of the
new system say.
From
2000 to 2007, some 39.7 million motorized vehicles were
registered with the LTO. However, records show that only
17.1 million valid TPL policies were actually issued for
the same period.
Simple
arithmetic would show that 22.6 million motorized
vehicles registered with the LTO were running on the
road with policies not worth the paper they were printed
on. More graphically, two out of three auto owners who
bought TPL insurance cover for their cars, jeeps, trucks
and motorcycles were actually victims of massive highway
robbery.
Authorities eventually discovered that this
multibillion-peso racket had been going on for decades
through the simple expedient of selling one insurance
policy to several vehicle owners or by switching the
certificates of cover (COCs), which need to be presented
to the LTO as a requirement for vehicle registration.
Conservative estimates place at P2 billion the losses
the government incurred from fake TPL policies during
the seven-year period. Going by the number of fixers and
other shady characters who regularly hang around LTO
offices nationwide, the actual losses are probably
higher.
Ironically, the system that allowed auto TPL racketeers
to carry out their brisk trade was supposed to have been
an improvement over the Philippine Motor Vehicle
Liability Pool established in the 1970s by
then-President Ferdinand Marcos. It took just a few
years for the pool to collapse due to various fraudulent
practices reportedly perpetrated by the member-companies
and the pool’s management.
Marcos
later issued Presidential Decrees 1455 and 1814, which
transferred the function of giving compulsory
third-party liability cover to the GSIS for government
vehicles and to the private insurance companies for
private vehicles. While hardly any problems were noted
in the auto- insurance scheme for government vehicles,
complaints against the CPTL scheme for private vehicles
began to surface almost as soon as it was adopted.
The
present system has evidently failed to prevent the sale
of fake COCs and the multiple issuance of the same
certificate to different vehicles. Some companies were
even reported to have issued such certificates even if
they have no license from the Insurance Commission to do
so.
As a
result, unpaid claims by victims of vehicular accidents
began to pile up because the policies that should have
guaranteed benefits were determined to be bogus, and the
companies that issued them turned out to be unlicensed.
The
racket in fake TPL policies could not have prospered
without the collaboration of crooked civil servants, who
also were given a piece of the action. For years, the
words “LTO” and “fixers” were inextricably linked.
Finally,
the discredited scheme resulted in huge losses, in terms
of forgone revenue, for the government. According to
figures provided by the Insurance Commission, the
Republic lost an estimated P268 million in taxes from
undeclared, unreported and fake policies in 2003 alone.
As in
any business dispute, real value determines the bottom
line.
When the
GSIS-supervised CTPL system kicks in later this month,
private car owners will pay P575 per policy, which is
P325 less than the P900 fee charged by present TPL
providers. Similarly, substantial savings await owners
of other types of motor vehicles: jeepneys, P575
compared with the old price of P950; light trucks, P625
versus P980; motorcycles, P265 versus P350.
Not only
are fees in the upcoming CPTL system a lot cheaper, auto
owners would have the peace of mind that the policies
for their vehicles are backed up by no less than the
state pension fund.
Rather
than a monopoly, the GSIS will function as a sort of
clearing-house for insurance companies that would like
to participate in the new CTPL system. It will farm out
the issuance of policies to what it describes as
“creditable reinsurers” with a good track record in
honoring claims.
Proponents claim that so far, 38 insurance and
reinsurance companies have expressed interest to take
part in the new auto CTPL system.
What
guarantee is there that the new system would not go the
way of its predecessors?
Save for
public vigilance, none, really. However, we cannot
continue with the current scheme that not only makes a
mockery of laws aimed at giving some measure of
protection to road-accident victims, but is also a
source of so much graft. |
