PIRA says no to cartelized motor insurance contract monopoly PDF Print E-mail
Wednesday, 25 November 2015 11:13

The Philippine Insurers and Reinsurers Association (PIRA) opposes the move of the Land Transportation Office (LTO) to introduce a cartel that would monopolize the issuance of third-party liability insurance to motor vehicle owners.

In an interview, Pira Chairman Michael Rellosa said insurance companies have voted overwhelmingly to take all possible legal measures to oppose the imposition of LTO’s Memorandum Circular (MC) 2015-1975.

The circular creates an entity that would administer the issuance of compulsory third-party liability (CTPL) insurance to motor vehicle owners.

Rellosa said 44 out of 55 Pira member-companies that attended the association’s special membership meeting voted to oppose the LTO’s order, and 40 of these companies expressed support for a legal action to stop the order.

“Our members recognize that the LTO does not have the legal right to regulate insurance business in anyway since such power and responsibility reside only in the Insurance Commission under the revised Insurance Code,” Rellosa said.

“It is illegal for the LTO to issue an order limiting the business of issuing CTPL insurance cover to a select number of insurance companies, and worse, appoint an administrator that virtually takes over the function of the Insurance Commission,” he said.

Meanwhile, insurance agents who sell CTPL insurance cover welcomed Pira’s decision.

Salvador Navidad, president of the Bukluran ng mga Manggagawa sa Industriya ng Seguro (BMIS), said Pira’s move gave them hope in their fight against the LTO’s cartelized monopoly. BMIS has filed a motion for a temporary restraining order to stop the LTO’s order.

The group said, “It is also immoral for the LTO to take away our role as legitimate insurance agents and deprive us of a legitimate livelihood.”

“For the record, we do not sell fake CTPL insurance cover. If the LTO insists that such a thing exists, then we challenge them to prove it. Irregularities exist in the LTO only because unscrupulous LTO officials are involved,” the group added.

BMIS also stressed that LTO’s MC 2015-1975 is “a way for the agency to institutionalize corruption in the LTO. This virtually creates a cartel of insurance companies that would monopolize the CTPL insurance business and benefit only the corrupt officials of the LTO.”

“If the LTO is truly sincere in improving CTPL insurance, it should instead explore interagency cooperation and not impose a system that was arrived at without consultation with the Insurance Commission, the Bureau of Internal Revenue, and private insurers,” the group said. — BM