Commission warns LTO vs car insurance monopoly

THE INSURANCE Commission has again urged the Land Transportation Office (LTO) to address the concerns of non-life industry players that a recent LTO order on the mandatory insurance for vehicle owners would result in a monopoly and job losses.

Deputy Insurance Commissioner Dorothy M. Calimag, in a Nov. 24 letter to LTO chief Alfonso Tan, said it was important that no regulation or directive issued by the government violates pertinent rules, regulations or laws.

Industry representatives have aired their concerns about Memorandum Circular AVT-2015-1975, or the “Reformed Compulsory Third-Party Liability (CTPL) Insurance Project,” that the LTO issued last month.

Registration requirement

A CTPL insurance policy is required when registering a motor vehicle, whether for commercial or personal use, with the LTO. It is meant to provide protection to the riding public.

The Insurance Commission has been as-king the LTO for an explanation about a number of issues related to its circular that were brought up by the Philippine Insurers and Reinsurers Association, which groups non-life insurance players, as well as the Bukluran ng mga Manggagawa sa Industriya ng Seguro, which has CTPL sellers among its members.

According to industry sources, the LTO did not respond to the Insurance Commission’s previous inquiries, including the Nov. 5 letter from Deputy Insurance Commissioner Vida T. Chiong, also addressed to Tan.

‘Please clarify’

Calimag asked the LTO to clarify if the new CTPL order “unduly amends and expands the coverage of the Insurance Code.”

“LTO is requested to explain the reason behind or justification for requiring administrators to issue the CTL and authorizing the same to regulate the issuance of CTPL. Furthermore, LTO is requested to clarify what roles and/or functions it will exercise over the administrators/pool members/insurance companies and insurance agents as a result of [the memorandum circular],” Calimag said in her letter.

The Insurance Commission also sought the LTO’s side concerning fears that its reformed CTPL program would not only displace insurance agents and deprive them of their livelihood but also result in monopoly, restraint of trade and unfair competition.

“Specifically, the LTO is requested to explain how the reformed CTPL project will ensure that insurance companies who are not accredited as administrators will nevertheless be able to participate in the CTPL business, within the bounds of law,” Ca-limag said.

LTO mandate

“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,” she added.

The Insurance Commission also reques-ted the LTO to confirm if it was mandated under relevant laws and regulations to issue such an order, conduct accreditation, as well as appoint administrators with regards the issuance of CTPL.

“We reiterate our earlier recommendation on this matter, that: the Insurance Commission must continue to exercise re-gulatory supervision over insurance companies and insurance agents; [and] all laws and regulations implemented by the Insu-rance Commission for the protection of the insuring public and the supervision over insurance companies are strictly complied with,” Calimag said.

She stressed that the LTO’s reformed CTPL program “must result in the greater participation by insurance companies in the CTPL business” while also addressing the “legitimate concerns” of insurance agents.