Insurers nix ‘reformed’ CTPL

MANILA, Philippines - The non-life insurance industry is opposing the proposed Reformed Compulsory Third Party Liability (CTPL) insurance plan of the Land Transportation Office (LTO).

According to the Philippine Insurers and Reinsurers Association (PIRA), the plan will form a CTPL pool of insurers but under a single administrator with a life span of five years.

The proposal would form a monopoly after the LTO appoints the single administrator after a public bidding. “The proposed project is very unfair,” PIRA said.

“The CTPL is an insurance product sold by all registered non-life insurance companies thus no one insurance company must monopolize such product as it goes against free trade,” it added.

It would convert all the non-life insurance companies into reinsurers thus limiting premium earnings. It would disregard the right of the insurers to do business and the right of the public to choose their insurer.

LTO statistics indicate that premiums will steadily increase from P3.7 billion in 2012 to P8.3 billion by 2016, or from 7.4 million vehicles in 2012 to nine million in 2016.

That means greater opportunities for insurers under the present set-up or dramatically lower if an administrator takes over.

The Insurance Commission (IC) has formed a legal team to review the LTO proposal, after a number of meetings with industry players.

Meanwhile, the employees and agents of the insurers have also expressed their distaste for the LTO program.

Salvador Navidad, national president of the Bukluran ng mga Mangagawa sa Industriya ng Seguro (BMIS), warned that the supposed initiative would only result to a monopoly in the auto insurance industry.

“In this reformed CTPL plan, things will basically be the same except that there will be a single administrator or one company who will supervise all car insurance companies in the whole country,” Navidad said.

The monopoly would practically negate or render useless the presence of thousands of frontline employees and agents.

But at the same time, a single entity potentially can result in poor services, as it does not have to worry about competition.

PIRA related that in the latter part of ‘70s, CTPL was being handles by the Philippine Motor Vehicle Liability Pool (PMVLP). The pool is composed of insurance companies with the authority to manage the pool.

Unfortunately, the pool was mismanaged, and the funds “mysteriously” disappeared.

In 2006, another group handled the pool.

In 2011, the IC did not favor LTFRB’s request for these two groups to handle the CTPL coverage, as accordingly pubic utility vehicles (PUV) must be made voluntary of the operator so as not to discriminate other licensed insurance companies to engage in such business. 

During those times, coverage of CTPL policy were adjusted from P50,000 to P100,000 without adjustment. The premiums and all types of claims/losses were included with no more exclusions, since this coverage is for the public.

The IC questioned limited cover, thus, losses (especially for buses) went up but premiums did not improve. Ultimately, the CTPL consortium was terminated.