The country’s non-life insurance industry has filed with the regional trial court of Mandaluyong for an injunction stopping the Government Service and Insurance System (GSIS) from being involved in the business of issuing comprehensive third-party liability (CTPL) insurance coverage.
It had earlier filed a temporary restraining order (TRO) against the GSIS but the court order has since lapsed.
“Our injunction should permanently stop the GSIS from the CTPL business,” Melencio Malilin, director of the Philippine Insurance and Reinsurance Association (PIRA) said in a press briefing yesterday.
PIRA represents the country’s 86-strong non-life insurance industry.
For the meantime, non-life insurance companies involved in the CTPL business will have to compete directly with the GSIS. With the termination of the TRO, the government pension fund started operating in several offices of the Land Transportation Office (LTO).
“We just hope that the LTO does not favor the GSIS over the competing private sector insurers,” PIRA said.
Ironically, government is again competing directly with the private sector in a business that the private sector has been serving for many years.
Insurers also express concern that the GSIS will next enter into the business of selling comprehensive auto insurance. The comprehensive is a voluntary auto insurance albeit wider in protection scope and more expensive than the mandatory CTPL.
The CTPL business is worth P3.5 billion covering the registration of 5.5 million vehicles in 2007. The comprehensive auto insurance is worth over P10 billion.
Meanwhile, the PIRA has gotten more concessions with the Bureau of Internal Revenue (BIR) regarding new taxes under Revenue Memorandum Circular (RMC) 30-2008 and RMC 59-2008.
PIRA officials said that the BIR has agreed to make several amendments to the existing memorandum circulars.
RMC 30 and 59, among others, is enforcing new regulations that will result in double taxation in the case of the certificate of cover (COC) in the case of auto insurance. It also charges a P15-documentary stamp tax (DST) on a personal accident (PA) product worth P10.
But PIRA is optimistic that they can work it out with the BIR.
“We will not be joining our life insurance counterparts in their plan to seek a temporary restraining order against the BIR on the two memorandum circulars,” Malilin said, adding that their problems are more complicated.
The life sector, through the Philippine Life Insurance Association (PLIA), will be filing for a TRO against the two RMCs as the BIR introduced new taxes on the sector.