Third player wants piece of 3rd-party liability action

While government must address the legality of the Government Service and Insurance System (GSIS) in selling comprehensive third-party liability (CTPL) insurance policies to private individuals and entities, it is now faced with a new challenge.

It is not only the consortium formed by the Philippine Insurers and Reinsurance Association (PIRA) that claims to be prepared to correct the anomalous practices in the issuance of CTPL for vehicle registration. Now another private group is presenting itself as an alternative.

Incidentally, the PIRA is the umbrella organization of the 95 licensed non-life insurance companies operating in the country.

Known as the Ramsi Model, the alternative group claims to be able to offer services that will systematize the sale of CTPL, and theoretically speed up vehicle registration as well as ensure the correct collection of tax revenues.

Ramsi is an information technology (IT) management company run by a certain Charlie Uy, a former non-life insurer.

The CTPL is a mandatory non-life insurance product for the protection of life. It is required by law prior to vehicle registration with the Land Transportation Office (LTO).

The Insurance Commission (IC) is willing to recognize the two groups as long as they meet all requirements to ensure the eradication of corruption on the CTPL issuance, ensure correct tax collections, and claims collection to protect the riding public.

"There is room for two consortiums," IC Commissioner Benjamin S. Santos said in a letter to Finance Undersecretary Gabriel R. Singson Jr. "In fact, the Supreme Court decision on the Land Transportation Franchising Regulatory Board-Personal Liability (LTFRB-PL) issue reiterates government policy of fair and proper competition."

Santos said it endorses both the Ramsi and the PIRA models. They are however being encouraged to hold discussion whether they could join forces or remain two separate entities.

Ramsi is offering a pre-paid concept but the security issue still hangs. The downside is that it will require insurers cash outflows to buy the cards.

The PIRA option utilizes the popular bank concept but it would result in a one-day delay. The bank must relay daily transactions to the LTO, and get all the clearances before it could release the receipt. The receipt serves as proof of payment for the CTPL.

"It is an e-commerce type of transaction, almost scriptless," PIRA proponents said.

Another area of concern is whether the LTO will entertain the new concept.

It is presently using two IT providers for authentication and verification process prior to the issuance of the CTPL. To date, it has been relatively ineffective from the point of view of reducing fake CTPLs as well as increasing tax collections.

Last year, there were 4.7 million registered vehicles. It should have resulted in premium collections of roughly P2.5 billion.

Fifty percent of insurance policies appearing in the LTO records of vehicle registration does not appear with the IC records.

Thus taxes collected amounted to less than half the number of registered vehicles. That means that revenues due government fell short of nearly half or from an estimated P600 million only P310 million were realized.

In 1999, the IC reported 889,662 policies issued versus the 3.7 million vehicle registered with the LTO. Meaning, roughly 2.8 million vehicles were without CTPLs or using fake insurance policies.