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I have been driving a car that was neither my father’s nor my
older brother’s, but my own, since 1981. Through all that time I
have been paying annual premiums for a third-party liability (TPL)
insurance policy whenever I had my trusty chariot of the
moment—invariably second or third-hand—registered with the Land
Transportation Office (LTO).
Some time in the 1970s, the government—in
response to the growing number of vehicular accidents—obliged
motorized vehicle owners to get TPL insurance cover. Those whose
autos were brand-new or late-model usually opted for comprehensive
insurance, which also covers auto theft. Without those insurance
covers the LTO would reject car registration applications outright.
TPL premiums were measly compared to those for
comprehensive insurance cover, and most motorists hardly gave a
second thought as they forked out a few hundred pesos to insurance
agents that camp out near LTO offices. And since the actuarial odds
are that the majority of car owners do not figure in road mishaps,
the insurance companies specializing in TPL cover have raked in
hefty profits over the past 30 years or so.
However, victims of auto accidents often recount
horror stories about how hard it was to secure payment from TPL
insurance companies—that is, if they could locate such firms at
all. That many of these companies are fly-by-night outfits visible
only when they collect premiums but otherwise impossible to trace is
the stuff of many car-owners’ conversations.
TPL insurance provides a coverage of P100,000
for death or bodily injury to third parties involved in accidents
with the insured vehicles. However, data on how much of these
benefits have been actually paid out are treated like state
secrets—giving rise to well-founded suspicions that many of those
premiums were bogus.
The statistics that are publicly available show
that from 2000 to 2007 some 39.7 million vehicles were registered
with LTO—but only 17.1 million valid TPL premiums were on record
to have been issued for the period. The discrepancy of 22.6 million
is the number of fake TPLs sold to the motoring public in the
seven-year period. In other words, two out of three buyers actually
paid for worthless insurance either through the multiple sale of one
insurance policy or through the switching of certificates of cover.
It is estimated that over the same period the
government suffered losses totaling P2 billion, thanks to the bogus
TPL racket. That money went into the pockets of crooked merchants,
whom Sen. Juan Ponce Enrile justifiably branded as “insurance
buccaneers.”
Matters turned worse—for auto owners and the
government—when insurance companies began to raise their TPL
premiums. The negligible amounts of the 1970s until the 1990s are no
more. This is evidently the reason that when the government decided
to reform the old TPL scheme, it encountered hardly any resistance
from auto owners.
The Department of Transportation and
Communications (DOTC) recently approved for implementation by the
LTO the Compulsory Third-Party Liability (CTPL) proposal of the
Government Service Insurance System (GSIS).
And why shouldn’t owners of motorized vehicles
welcome the GSIS CTPL scheme?
For one, it will save them money and, two, it
will ensure that the CTPL cover they pay for are genuine.
A private vehicle owner will now only pay P575
for the GSIS CTPL compared to the P900 charged by the old TPL
providers—a difference of P325 per policy. The GSIS CTPL for
utility vehicles, including jeepneys, will also cost only P575
compared to its old price of P950, for a saving of P375. Light truck
owners will pay P355 less with the GSIS CTPL for their vehicle
category, which costs P625 per policy compared to the old price of
P980. Motorcycle owners will save P85 per GSIS CTPL policy costing
P265 as against the old TPL price of P350.
LTO chief Robert Suansing told newsmen recently
that DOTC, the Insurance Commission and GSIS have already signed a
memorandum of agreement authorizing the state pension fund to
handle CTPL insurance for all motorized vehicles. The GSIS-formulated
scheme is undergoing pilot tests prior to its full implementation by
the end of July.
Even before authorities gave the GSIS CTPL
system the go-signal some 38 insurance and re-insurance companies
have said they would like to take part in the scheme. This is in
contrast to the allegations of critics that the new system will
create a state monopoly and make the government enter a business,
which ought to be left exclusively to the private sector.
Suansing clarified that while GSIS will oversee
the new CTPL system it will also farm out the actual provision of
CTPL policies to what he called “creditable reinsurers, thereby
rendering without basis claims that GSIS will monopolize the CTPL
business.”
In effect, proponents of the new system said,
the job of GSIS would be to ensure that only legitimate reinsurers
with a proven track record in honoring claims will be able to have a
slice of the CTPL business.
Proponents added that the GSIS CTPL system will
also remove red tape in the registration of motor vehicles. The
purchase of GSIS CTPLs by motorists will be automatically included
in the LTO registration. In the old TPL system motorists had to
first buy TPL covers from private dealers before they could begin
their actual transaction with LTO.
dansoy26@yahoo.com
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