IC casts doubts on reformed CTPL

MANILA, Philippines - The Insurance Commission (IC) is concerned thousands of jobs may be lost, and regulations may be onerous, with regards to the proposed reformed compulsory third party liability (CTPL).

The CTPL is a mandatory insurance plan required by the Land Transportation Office (LTO), for vehicle registration. The “reformed” version is a modification of the CTPL.

Commissioner Emmanuel F. Dooc of the Insurance Commission (IC) said they have collected sentiments or positions expressed by non-life insurance companies as well as agents and workers affected by the new measure, and in turn, forwarded the same to the LTO.

“What we want is for the land transportation officials to listen to all the affected parties before enforcing any proposal,” Dooc said.

He likewise confided that several insurers was prepared to seek legal measures to stop LTO.

The new measure requires an administrator which insurers said would eventually turn out as the insurer, and that the non-life insurance industry would turn out as mere reinsurers.

“That would mean a dramatic loss of premium income for us, as it adds up to the cost significantly,” they lamented.

There is the 30-percent management fee, agents commission, taxes, and other overhead costs.

The Bukluran ng mga Mangagawa sa Industriya ng Seguro (BMIS) warned the supposed initiative will only result to a monopoly in the auto insurance industry.

The single administrator would supervise all car insurance companies in the whole country, which in turn, would practically negate or render useless the presence of thousands of frontline employees and agents.

Both agents and insurers also warned that a single entity could potentially result in poor services, as it does not have to worry about competition.

Another insurer said the proposed administrator is not the solution to problems of fake CTPL, fly-by-night insurers, under cutting of tariffs, tax leaks, and the like.

They said that a CTPL pool was formed previously but abolished due to poor performance.

The Government Security Insurance System (GSIS) made an attempt to take the administrator role but was vehemently opposed by the private insurers.

“We should discipline our ranks, impose sanctions if necessary, and urge government to clean up their system and personnel of graft,” they said.

Another argument is that the proposed administrator is a violation of the Amended Insurance Code or Republic Act (RA) 10607.

Section 193 of RA 10607 states that: “No insurance company issued with a valid certificate of authority (CA) to transact insurance business anywhere in the Philippine by the Insurance Commissioner, shall be barred, prevented, or disenfranchised from issuing insurance policy or from transacting any insurance business within the scope or coverage of its CA, anywhere in the Philippines, by any local government unit or any authority, for whatever guide or reason whatsoever, including under any kind of ordinance, accreditation system or scheme.”

As a backgrounder, the Philippine Motor Vehicle Liability Pool (PMVLP) managed the CTPL pool, which was deemed mismanaged and the funds “disappearance.”

By 2011, PAMI and another group wanted to handle the CTPL coverage but was opposed by IC.

It was also in this period that the policy was adjusted from P50,000 to P100,000, but the premiums were untouched. Ultimately, it was likewise terminated.