MANILA, Philippines - The country’s non-life insurers have filed a formal complaint with the Insurance Commission (IC) over the illegal and unfair practices by state pension fund Government Service Insurance System (GSIS).
In a letter dated Feb. 24, the Philippine Insurance and Reinsurance Association (PIRA) said GSIS published an advertisement introducing several insurance products that “are outside the scope of its authority, and may well be considered unfair incursion into the direct private accounts market.”
The government pension fund is selling products under its “Gcare Plans” for coverage of properties, risks, corporate and individuals, not only for active GSIS members, but also to their parents, spouse, children and relatives.
PIRA chairman Honorio J. Ramajo pointed out that the IC already rejected the GSIS proposed products twice — in October and December 2003.
The IC said GSIS cannot cover risks owned by its members. The GSIS Charter and the Property Insurance/General Insurance Fund Law (Republic Act 656) clearly indicates that the government pension fund only cover risks on government owned or rented properties, buildings, and properties in transit.
The non-life insurers also argued that the continued sale of the products under Gcare Plans would deprive the National Government of tax revenues since the GSIS is tax-exempt.
“GSIS’ limited powers under the law to extend non-life insurance coverage only to government properties and risks, was precisely the principal reason why it has been given various tax exemption privileges under our various laws, for it is assumed and expected that it would anyway deal exclusively in government to government transactions,” Ramajo said.
The PIRA said this would be another case of government directly competing with the private sector.
There are over 90 non-life insurance companies servicing the general public offering all sorts of risk coverage for auto, fire, personal injury, among others.
PIRA said that the GSIS advertisement offering insurance products under its Gcare Plans would ease out privately-run insurance firms.