Makati court stops LTO car insurance plan

MANILA, Philippines - The Makati Regional Trial Court (RTC) has temporarily stopped the implementation of the Reformed Compulsory Third Party Liability (CTPL) for vehicle registration.?

In a temporary restraining order (TRO) dated Dec. 2, the court stopped the Land Transportation Office (LTO) from implementing Memorandum Circular AVT 2015-1975 or the Reformed CTPL.?

Makati RTC Branch 65 Judge Edgardo Caldona said the memorandum violated regulations on monopolies and restraining trade under the Constitution.?

The Reformed CTPL was also deemed in violation of the Amended Insurance Code and the exclusive right of the Insurance Commission to issue a certificate of authority and regulate the country’s insurance industry.?“The respondent LTO has no authority to vest non-life insurance companies with blanket licenses to operate as reinsurers in clear violation of the Amended Insurance Code and their certificate of authority issued by the Insurance Commission,” the court said.?The court granted the petition of Standard Insurance Co. Inc., with the Insurance Commission, the Philippine Insurers and Reinsurers Association (PIRA), and Bukluran ng mga Mangagawa sa Industriya ng Seguro (BMIS).?The CTPL is a mandatory insurance plan required by the LTO for vehicle registration. The “reformed” version is a modification of the CTPL.?The new measure requires an administrator, which insurers said would eventually turn out as the insurer, resulting in the non-life insurance industry becoming mere reinsurers.?“That would mean a dramatic loss of premium income for us, as it adds up to the cost significantly,” the petitioners said.

Standard Insurance private counsel Reynaldo Geronimo said the designation of administrators is in excess of LTO’s jurisdiction and the circular infringes upon the constitutional provision against monopolies and restraint.

The petitioners argued that it could also lead to higher costs to vehicle owners.?Another insurer said the proposed administrator is not the solution to problems of fake CTPL, fly-by-night insurers, under cutting of tariffs, and tax leaks.?They said that a CTPL pool was formed previously but abolished due to poor performance. The Government Security Insurance System (GSIS) made an attempt to take the administrator role but the private insurers opposed this.?Another argument is that the proposed administrator is a violation of the Amended Insurance Code or Republic Act 10607.?Section 193 of RA 10607 states that: “No insurance company issued with a valid Certificate of Authority (CA) to transact insurance business anywhere in the Philippine by the Insurance Commissioner, shall be barred, prevented, or disenfranchised from issuing insurance policy or from transacting any insurance business within the scope or coverage of its CA, anywhere in the Philippines, by any local government unit or any authority, for whatever guide or reason whatsoever, including under any kind of ordinance, accreditation system or scheme.” –Perseus Echeminada