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IT seems
that the forces for and against the government’s planned
takeover of Compulsory Third Party Liability (CTPL)
insurance for motor vehicles have gone on war footing as
Department of Transportation and Communications (DOTC)
Order 2007-28, which will place the CTPL insurance
coverage of an estimated 5.5 million motor vehicles—a
business reportedly worth P3 billion—under the
Government Service Insurance System (GSIS), seems
destined for implementation.
DOTC
Order 2007-28, which was issued last year but not
implemented after it met resistance from insurance
companies selling CTPL coverage, is the result of a
proposal emanating from the GSIS that would prevent
unscrupulous insurance companies and agents, as well as
corrupt Land Transportation Office (LTO) officials, from
victimizing motor-vehicle owners who register their
vehicles.
CTPL is
an insurance policy that covers motor vehicles and their
owners against third parties killed or injured on the
road. Under the law, all motor vehicles must have CTPL
insurance with a certificate of coverage (COC) as a
prerequisite for registration.
“Scams”
involving CTPL insurance are said to be common during
the motor-vehicle registration process and are done in
either of two ways: After paying the required insurance
premium, a motor-vehicle owner is issued a counterfeit
COC, which, in the event of an accident involving the
said motor vehicle, will not be honored by the issuing
insurance company. In the other modus operandi, several
COCs bearing the same serial number are issued to
different motor-vehicle owners. Problems arise when one
or several motor-vehicle owners holding COCs with
identical serial numbers seek a claim with the insurance
company.
Both are
possibly done with the complicity of 1) the vehicle
owner, who is after the convenience that the procedures
offer; 2) the insurance company and/or its agent, who
want to make a fast buck; 3) officials of the LTO branch
that is processing the vehicle registration and who
receive a “cut” from every transaction; or all of the
above.
According to GSIS president and general manager Winston
Garcia, the government lost P2 billion in tax payments
over the past eight years as a result of the current
system, and DOTC Order 2007-28, which would make the
GSIS the sole provider of motor-vehicle insurance in the
country, would put a stop to the corruption in the
process and ensure that all motor vehicles and their
owners are properly covered and the correct taxes are
remitted to the national government.
Under
the GSIS proposal, vehicles registering at any LTO
branch will automatically receive third-party liability
insurance coverage, which will be included in the
registration fee, negating the participation of “fixers”
in the procedure.
Garcia
stressed that, “Our system is the best solution to the
ongoing problem of selling of fake CTPLs.”
In a
press conference held last week, the Philippine Insurers
and Reinsurers Association (Pira), which consists of
more than 90 local and foreign insurance companies,
questioned the wisdom and appropriateness of
implementing DOTC Order 2007-28 since the DOTC is a
government agency that is not tasked with regulating the
insurance business, and said it will result in a
monopoly by the GSIS.
“This
will be just like martial law again,” said Melencio
Mallillin, a trustee of Pira and president of the
Insurance Institute for Asia and the Pacific, the
authority in insurance education in the region.
Mallillin pointed out that a GSIS takeover of the CTPL
business will never be good for anyone, even the
government, as it will send the wrong signals to foreign
investors who are planning to do business in the
country.
“It will
give the country a bad image in the international scene.
In other countries, they are encouraging their private
sector to grow. Even in China, which is a communist
country, the private sector is flourishing. Only in the
Philippines can you see the government taking over a
private business, displacing at least 50,000 agents who
depend on the CTPL as their primary source of income,”
he said.
The DOTC
designated the GSIS, a tax-exempt agency, to be the sole
insurer under the system. The GSIS, for its part, denied
that the measure will result in a monopoly since it
would “reinsure” 80 percent of the business with the
private sector.
Pira’s
Mallillin, however, doubts the GSIS can deliver on its
promise. “Reinsuring means you will only transfer the
risks, but GSIS, being the insurer, will still take care
of the claims. This is bad news for all motorists. With
the bad record of GSIS in attending to the needs of its
members, we doubt if it can serve the 5.5 million car
owners when it takes over the entire CTPL business,” he
said.
Pira has
filed a case against the DOTC order in court. However,
the Regional Trial Court in Makati recently dismissed
its case on technical grounds.
Pira
chairman Horacio Ramajo said they will pursue the battle
up to the Supreme Court.
As of
late, the word war over the DOTC order has turned ugly.
Pira
took exception to a recent radio interview given by LTO
chief Alberto Suansing in an unnamed radio program,
wherein he allegedly labeled insurance agents selling
CTPL insurance as “manloloko” (con men), wherein he also
allegedly said, “Maghanap-hanap na kayo ng disenteng
trabaho [Start looking for decent jobs].”
Salvador
Navidad, president of the Bukluran ng mga Manggagawa sa
Industriya ng Seguro, the association of all CTPL
agents, said Suansing’s wholesale accusation that all
agents selling CTPL insurance are con men is a very
serious offense that they cannot ignore.
“Ang
LTO ang bulok sa corruption [It’s the LTO
that is festering with corruption],” said Navidad. “Huwag
niya kaming idamay sa kabulukan ng LTO [He should
not drag us into the corruption happening in the LTO].”
Garcia,
meanwhile, stated in a separate press conference that
not all of Pira’s members are against the proposal, and
that a majority of them are supportive of the proposed
reforms. He shared that a “cartel” involving only nine
insurance companies that accounts for 75 percent of the
CTPL business is rejecting the GSIS proposal. He
specifically named Great Domestic Insurance, BF General
Insurance Co., Plaridel Surety and Insurance Corp.,
Security Pacific Insurance, Far Eastern Surety, Standard
Insurance, South Sea Surety and Insurance, People’s
General Insurance and Acropolis Central Guarantee as the
leading opponents of the DOTC order. |
