IC issues framework for PPAI

MANILA, Philippines — The Insurance Commission has released new guidelines for the implementation of the Passenger Personal Accident Insurance (PPAI) program, including the accreditation of insurance pools which will be allowed to provide PPAI policies.

Two years after the regulation of the PPAI program was transferred to the IC, Insurance Commissioner Dennis Funa issued Circular Letter  2020-96 laying out the framework for the insurance program.

The PPAI program requires public utility vehicles to acquire insurance coverage for their passengers, including the driver, which provides for accidental death benefits and bodily injury benefits.

It was previously regulated by the Land Transportation Franchising and Regulatory Board (LTFRB) before it was transferred to the IC in 2018.

In November 2018, the IC extended the accreditation of the two consortiums currently handling PPAI claims, namely Passenger Accident Management and Insurance Agency Inc., and SCCI Management and Insurance Agency Corp. Inc.

Under the new circular, insurance companies will be allowed to participate in the PPAI program by joining an insurance pool, with a mandatory requirement of one lead insurance company and at least 12 members.

Insurance pools are given 30 calendar days from the publication of the circular in two newspapers of general circulation to submit their intent to participate, together with the documents required.

According to the IC, pools are required to have a management company, which will be tasked to handle the day-to-day operations of the pool in order to ensure the fiscal stability and viability of the program, as well as the quick processing of claim applications.

The IC said the management company must be registered with the Securities and Exchange Commission, with a minimum track-record of five years as a management company in a similar type of business, and a minimum paid-up capitalization of P20 million.

The management company and the lead insurance company must also have no derogatory record, as reflected by a tax clearance from the Bureau of Internal Revenue (BIR).

The insurance pool and management company should also submit a written endorsement signed by at least three recognized national transport groups from the different classes of public utility vehicles.

“For as long as these minimum requirements, stated herein and below, are met and maintained, the insurance companies, as a pool, shall be allowed to participate in the program. Once these minimum requirements are met, it shall be ministerial on the part of the Commission to allow the companies to participate, as a pool,” the circular stated.

An insurance company, however, can only join one pool, the IC said. Multiple membership will result in permanent disqualification from the program.

According to the IC, qualifying pools shall be given recognition by the IC, which will be valid for five years.

The insurance pools and its members should provide an “all-risk, no fault” insurance coverage with a duly approved policy by the Insurance Commission.

Each insurance pool must set up and maintain a claims fund, which should not be less than P50 million at any given time.

As part of the transitory provisions, the present insurance pool providers under the existing PPAI program will continue issuing policies until such time that the IC recognizes insurance pools under the new framework.