Napocor defies GSIS on insurance

The National Power Corp. (Napocor) will hold its own bidding for a $10-billion insurance policy for its fixed assets despite strong objections from the Government Service Insurance Services (GSIS), Napocor president Jesus N. Alcordo said yesterday.

In a press conference, Alcordo said that as a client, they want to make sure that they would fetch a "better rate" for their insurance policy.

"We are not trying to meddle with GSIS’ affairs. Napocor is the client and it pays for the premiums. We just want to ensure that we will get the reasonable service that we paid for," he said.

Under the law, GSIS is mandated to secure all properties of government agencies and government-owned and controlled corporations (GOCCs).

In a letter to Alcordo, GSIS president and general manager Winston F. Garcia said. "We reiterate our position that being NPC’s insurer, it is the responsibility of the GSIS to secure for NPC the most favorable terms and conditions for the insurance policy that we will issue."

The letter was in response to an invitation from Napocor for the GSIS to designate two representatives to an industrial all-risk policy award committee (IAR-PAC) that the state-owned power firm had created for its $10-billion IAR insurance policy.

In his letter, Garcia said Napocor’s proposal is untenable. "Please note that how the GSIS will protect its risks under the insurance policy is GSIS’ sole undertaking. The GSIS will not accept protection from insurance and reinsurance companies that are not of its own choosing. After all, it will be a GSIS insurance policy that will answer for any and all claims arising from the same."

Garcia notified Napocor that the GSIS will conduct its own bidding for the $10-billion IAR policy, to which the power firm may designate observers. Prior to the bidding, the GSIS will verify the underwriting information and loss experience of the Napocor over the past five years.

The GSIS’ insurance policy for Napocor is set to expire Sept. 30, 2001. Under Republic Act 656 and Administrative Order 141, the GSIS has the mandate to insure properties of government agencies, including government-owned and controlled corporations.

However, Alcordo is not convinced. He said if GSIS would not allow them an active role, they would conduct their own bidding.

"We are not violating the law. We want the bidding to get the best rate and best broker," he said. The Napocor chief said they would not know if they were able to get the best rate and broker if they would not be given a chance to take an active part in the bidding of the insurance policy.

"We need to have a more transparent process. I am just responsible for whatever services the Napocor would get from this process," he said, reacting to GSIS’ claim that it has the sole responsibility to insure and reinsure government assets.

Alcordo pointed out that while GSIS has the sole authority to secure government assets, there is also a provision in the law that says GSIS should be competitive in securing the most favorable terms and conditions for the insurance policy that GSIS will issue to Napocor.

"How can we know that we got the best rate if we will not participate in the bidding. We want to get involved in the process," he said.

In case Napocor gets a better rate than the GSIS, he said they will call the attention of higher authorities. "When at the end of the process, we found that our rates are better, we will call the attention of the secretary of energy," he said.