The Insurance Commission (IC) is questioning a memorandum circular issued by the Land Transportation Office (LTO) that will establish two pools of insurance companies that will handle all of the compulsory third-party liability (CTPL) insurance policies of registered motor vehicles.
In a letter sent to LTO chief Alfonso Tan, IC Officer in Charge Dorothy Calimag inquired as to the validity of the Reformed Compulsory Third Party Liability Insurance (RCTPL) that was established by MC AVT-2015-1975 issued by the LTO.
Under the reformed compulsory insurance system for motor vehicles, there would only be two “administrators” that will be accredited to handle the compulsory insurance policies
required of each motor vehicle sought for registration.
One administrator will be appointed for motor vehicles with license plates ending in odd numbers and another for those ending in even numbers.
Calimag pointed out in her letter that there are insurance companies saying that the reformed compulsory insurance system for motor vehicles will result in a virtual monopoly, since all motor vehicles are required to
have insurance.
“The LTO is requested to explain whether the RCTPL will result in prohibited monopoly, restraint of trade and unfair competition under our laws. Specifically, the LTO is requested to explain how the RCTPL will ensure that insurance companies who are not accredited as administrators will nevertheless be able to participate in the compulsory third-party liability insurance business, within the bounds of law,” Calimag’s letter to the LTO said.
“Another issue raised is that the creation of administrator, in effect, limits those that can actually sell CTPL policies, in contravention of their Certificates of Authority,” the letter added.
The letter, dated November 24, 2015, is already the fourth letter from the IC requesting the LTO to explain the apparent arrogation of the IC’s mandate to be the sole regulator of insurance companies and the products that they issue, including motor vehicle insurance which falls under the nonlife insurance business.
But with the deadline for the submission of accreditation documents for those seeking to become one of only two administrators of the RCTPL that will be appointed, the IC has reiterated its request to the LTO to explain the legal basis behind its memorandum circular which will effectively encroach upon the
IC’s mandate.
“With due respect, LTO is requested to confirm that its mandate under relevant laws and regulations allows it to issue MC AVT-2015-1975, conduct accreditation and therefor appoint administrators,” Calimag’s letter said.
“We reiterate our earlier recommendations on this matter that: the Insurance Commission must continue to exercise regulatory supervision over insurance companies and insurance agents; all laws and regulations implemented by the Insurance Commission for the protection of the insuring public and the supervision over insurance companies are strictly complied with; the RCTPL must result in the greater participation by insurance companies in the CTPL business,” the letter added.