Questions of Policies
CTPL: Cure worse than the disease
By Honesto General
Philippine Daily Inquirer
First Posted 03:14:00 07/23/2008
With the current controversy on Compulsory Third Party Liability (CTPL) motor vehicle insurance swirling around us, it is best to start from the beginning.
The law on Compulsory Third Party Liability Insurance is Chapter VI of the Insurance Code (Presidential Decree 612, as amended) signed by Ferdinand Marcos in 1974. The vehicle owner is required to buy insurance against liability arising out of bodily injury to, and/or property damage of, third parties. The policy limit was P50,000 per accident. It is now P100,000.
Since the policy was compulsory on the part of the vehicle owner, the law provided that nobody who walked into an insurance office could be denied a CTPL policy. Because of this rule, it was feared that the CTPL on trucks, buses, taxis, jeepneys and tricycles, which were considered the least attractive part of the business, would gravitate to the big insurance companies.
An insurance pool was set up so that the good and the bad business would be shared equally by all the companies. After only a few years, the pool was disbanded and every company sold CTPL policies on its own.
The CTPL landscape has dramatically changed over the past 20 years. While all companies still write CTPL policies, around a dozen companies specialize in them. So what? They cannot compete with the big companies for the huge risks, like breweries. They have found their own niches in the market. They seem to be doing well enough. No complaints against them have been filed with the Insurance Commission.
Now, another tremor is shaking the non-life insurance industry. The Government Service Insurance System (GSIS) is poised to monopolize the P3-billion CTPL business. A memorandum of agreement has been signed by the GSIS, Department of Transportation and Communications (DoTC), the Insurance Commission and Stradcom, a privately owned IT company. The monopoly is set to start next month.
The non-life industry, including the Association of Insurance Brokers, is understandably furious. And so am I.
The memorandum of agreement is supposed to solve, once and for all, the longtime proliferation of fake and fraudulently issued CTPL policies. If this were true, how come no one has been sued in court or at the Insurance Commission?
Anyway, everything should be within the law. If the law is wanting, Congress should amend it and the President should sign it. But the DoTC, GSIS, Insurance Commission and Stradcom have taken over from Congress and the President and have drawn up an entirely new set of laws.
The Insurance Code provides that “the Land Transportation Office (LTO) shall not allow the registrations or renewal of registration of any motor vehicle without first requiring from the land transportation operator or motor vehicle owner … the presentation and filing of a substantiating documentation in the form approved by the [Insurance] Commissioner evidencing that the policy of insurance ... required by this chapter is in effect.”
The memorandum of agreement, spearheaded by the DoTC (which, by the way, is not mentioned at all in the Insurance Code) goes way beyond what the code says about the power of the LTO.
Finally, how about the transportation operator or the motor vehicle owner? Instead of having a choice from 90 insurance companies, and hundreds of agents or brokers, he now has to insure with GSIS, and GSIS alone. If he is not happy with the service of the GSIS—and we can be sure of the lousy service of the GSIS—where can he complain? Not at the Insurance Commission which has no supervisory power over the GSIS. Not at the DoTC, the LTO or Stradcom. Not his insurance agent or broker, which has no clout over the GSIS.
Finally, how dare anyone tell me where to buy my insurance policy?
The memorandum of agreement is a cure that is worse than the disease.
Previous columns:
Can SSS members trust Neri? – 7/16/08
Senior citizens: The fight goes on – 7/09/08
Princess of the deep – 7/02/08
Waging war against soaring prices – 6/25/08
Vice President Noli’s ad campaign – 6/18/08
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