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On
Friday, in full-page advertisements published in
selected broadsheets, a group of affected insurance
brokerages and industry practitioners sent out a strong
albeit emotionally gut-wrenching appeal against the
centralization of the Comprehensive Third-Party
Liability (CTPL) insurance with the Government Service
Insurance System (GSIS).
Their
arguments ranged from the defensive, where the careers
and jobs of thousands of insurance brokers were
threatened, to the latently antagonistic, pointing not
so much to the GSIS as an inappropriate agency but one
too heavily busy and burdened as it is.
The
issue of the CTPL has always been controversial. The
third party in a bilateral arrangement is the entity
injured who naturally stands apart and distinct from the
two contracting parties, the insurance company and the
entity contracting the insurer. Because the third party
is technically not a contracting party to the insurance
agreement, and yet it is the entity protected, already,
we can see where issues arise.
Third-party liabilities are, however, not aberrations in
the world of risk management, and various forms of risk
insurance typically carry such mitigation arrangements
that include one-off liabilities for life and property.
After all, an entity not only insures itself against
eventualities inflicted upon it, but where it also
injures, or has a liability against others, the prudent
way is to protect against those, as well.
There is
nothing controversial in that. However, when the state,
in its duty and responsibility to protect its
constituencies, the general public and, more important,
those unprotected from injury, compel third-party
liability insurance, then the typical becomes a tad
complex.
The
government’s charge to protect the unprotected is clear.
We maintain that the GSIS, a government-owned financial
institution, is an appropriate agency for that.
Centralizing with the GSIS makes sense considering the
duty of the government to ensure responsibility and
accountability among its constituencies.
That a
central insurer also leads to savings and, therefore,
lower premiums as a result of economies of scale simply
provides the icing on the cake. Technically, by
providing a central insurer, the state guarantees
adequate capital behind the CTPL. In any aspect of risk
management, capital adequacy and managed liquidity are
critical. A state guarantee on an insurer, even better.
Presently, the CTPL is reposed on the private sector,
and the most common encounters are when transport
vehicles are registered and the CTPL is a requisite. A
sundry list of nondescript brokerages and companies set
up what appear as temporary orange-crate premises and
service this need.
While
the accredited list includes reputable and adequately
capitalized insurers, these are few and far between. The
imagery of a temp pounding on an old Olivetti inside a
dilapidated shack between the vulcanizing shop and the
vaciador across the local Land Transportation
Office (LTO) does not help. The nightmare of shady and
undercapitalized companies, and worse, unpaid claims
from fake certificates, aggravate the problem.
Honesto
General, a seasoned insurance practitioner, columnist
and a reputable critic of the CTPL transfer, rightfully
cites servicing quality as critical. Private-sector
competition assures this. Many agree that the private
sector is far superior in this aspect.
Unfortunately, the CTPL is homogenous. Upon initiation,
competition among CTPL insurers boils down to who’s got
the most attractive typist. As most aren’t, many don’t
really care until an accident comes along.
LTO head
Alberto Suansing’s data cites two facts that sound the
alarm. The official records substantiate our fears.
Assuming the LTO ensured CTPL compliance, data show as
much as 66 percent of the insured carry spurious
certificates. That means only a third of the registered
can collect.
Recently, when the transportation department and the LTO
implemented an interim verification system following the
expiration of a contract with a private verification
company, they found “the CTPL business had effectively
been dominated by a small number of insurance
companies.” Of 92 licensed, only eight offered CTPL.
Never have so few dominated so much.
To
address problems resulting from inadequately capitalized
or fictitious insurance companies, the government
decided to centralize these with the GSIS.
The
timing of counterarguments to the transfer of an
important function from the private sector to one of
government’s largest fiduciary agencies could not have
come at a worse time. Extraneous variables operate on a
public caught between opposing forces in an altogether
different arena, and a controversy involving the GSIS
but alien to the CTPL question simply confuses.
Worse,
these new issues against the GSIS can be capitalized by
critics who, like agitated bees, swarm and then pounce
on the GSIS indiscriminately by going to town on sundry,
legitimate or illegitimate, valid or in-valid issues.
The
full-page ads cite three adverse consequences—lost jobs
and closed companies, competition and servicing
complaints and curative recourse. If the CTPL industry
is dominated by a few, what jobs and competition are
lost? The 66-percent spurious operators deserve closure.
If 66 percent in the industry is spurious, what recourse
is there against nonexistent or undercapitalized
entities? Try chasing after ghosts.
Let’s be
fair. The rather suspect timing of debating these
complex issues through expensive ads that hardly inform,
much less allow analysis, compel a better fora. One
begins to ask whether these issues had not already been
adequately debated elsewhere where they might be better
suited for meaningful responses than in paid ads, where
propaganda more than reasonable discourse is the
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