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Tuesday, October 11, 2005
Espinoza: A wake-up call for the insurance industry
By Fred C. Espinoza
LOOPHOLES. For a change, allow me to welcome Andy Manatad, president of the Board of Insurance Agents, in this corner so we can interact together with respect to the Third Party Liability (CTPL) coverage in the country.
In his letter to the opinion editor of Sun.Star Cebu, Manatad tried to discount the issues surrounding the CTPL non-life insurance industry. “This alleged problem as reported to the Insurance Commission (InsCom) as appealed by the Land Transportation Office (LTO) is a bit inaccurate,” he said.
The board president also tried to emphasize that “the truth of the matter (is), these inconsistencies that led to conclusions that there are fake coverages have something to do with some insurance companies’ tax- saving measure.”
However, instead of shedding light on these so-called tax-saving measures of insurance companies, Manatad immediately sought the kind indulgence of Sun.Star readers, saying “I will not elaborate about this scheme called tax-saving measure since
I am not privy on the matter. Only top management knows the inner working of this scheme, as they too, have the power to implement it.”
While it may appear prudent on the part of Manatad to express amazement over the “alarming loopholes in the vehicle insurance system for the moment, recent developments in Congress should serve as a wake-up call to the stakeholders in the insurance industry.”
For a while, he had entertained the notion that these reports on anomalies regarding the CTPL coverage were all inaccuracies.
“As an insurance man for almost three decades, I have never encountered such a report. In order to educate the insuring public, all Certificates of Cover (COC) issued by any insurance company is being authenticated first by the Insurance and Surety Association of the Philippines before they can be released to the insured,” he said in his letter.
But this is not exactly what is happening in the car vehicle insurance business today if we cite the Oct.3 privilege speech of Sen. Juan Ponce Enrile that exposed the corruption in the non-life insurance industry.
Enrile even had to criticize the Arroyo administration for the dismissal of Insurance Commissioner Benjamin Santos who, he claimed, had been trying to stop the nefarious activities of a band of crooks in the industry.
However, to get down to the meat of our the discussion, the CTPL has been in operation more than 25 years now, according to the Philippine Daily Inquirer columnist Neal H. Cruz, who had expressed concern over the plight of many vehicle owners after the exposé of Enrile on the alarming loopholes of the vehicle car insurance industry.
In his column, Cruz expressed outrage over the fact that “many vehicle owners who have had accidents are given the runaround when they try to collect from insurance companies.”
Most of the time, these CTPL policies are sold to them at the LTO branch where they register their vehicles, he added.
The blame was laid on the threshold of the so-called “fly-by-night companies” with deficient capital that have no intention at all of paying insurance claims, according to Cruz.
“There are at least 11 of these fly-by-night companies, and Enrile identified their leader by name,” Cruz said.
In the same privilege speech, Enrile also revealed that the insurance premiums that ought to have been collected from the car registration collections will amount to at least P2.5 billion a year. The government should collect P500 million a year from these insurance premiums.
But the latest available figures show that the entire insurance industry reported only P1.38 billion as collected premiums, in which only P90 million in taxes were paid, he said.
Where did the rest go? Enrile’s answer: “The non-life insurance industry of the country today has, over the years, deteriorated into one of the most corrupt sectors of business in the entire nation. The obvious reason for the incredible gap between the insurance premiums on the CTPL that ought to have been collected and those that have been actually collected was the uncontrolled and inordinate proliferation of fake and spurious CTPL policies which, because of their patently nefarious character, could not be recognized and declared official by the issuing non-life insurance companies,” he said.
In light of the timely revelation by Enrile, Manila Mayor Lito Atienza has cautioned city officials to deal only with agencies duly accredited by the InsCom.
(October 11, 2005 issue)
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