Wednesday, July 25, 2007 Council urges DOTC to suspend new insurance for vehicles By Grace L. Plata
THE Davao City Council passed a resolution Tuesday, requesting the Department of Transportation and Communication (DOTC) to suspend or put on hold Department Order 2007-28, which implements a new insurance system for motor vehicles, and consider an alternative scheme proposed by the National Insurance Commission.
Proposed by Councilor Pilar Braga, chair of the City Council committee on energy, transportation and communication, the resolution seeks to prevent a potential monopoly on vehicle insurance system.
Braga, in her privilege speech Tuesday, said that under the Department Order 2007-28 every motor vehicle owner in the country is required to buy his compulsory third party liabilty (CPTL) insurance policy from the Government Service Insurance System.
Department Order 2007-28 is otherwise known as the rules of integration of the issuance and payment of CPTL insurance with the Land Transportation Office (LTO) Information Technology projects system database.
"This order, for all intent and purpose, clearly imposes a monopolistic regulation," Braga said.
The CPTL is a mandatory vehicle insurance that guarantees a certain amount of benefit for victims of car accidents.
Under the new system, when implemented, the issuance of CPTL insurance policies would be integrated with the LTO project's Motor Vehicle Registration System (MVRS) and Revenue Collection System (RCS).
This new scheme, the government said, will promote greater efficiency in the collection and remittance of correct taxes to the national coffers and at the same time protect vehicles owners against overpricing of policies. Aside from this, it would also put a stop to the proliferation of fake insurance policies.
Braga said even with these reasons, the order was met with opposition from the insurance industry as they deemed it unconstitutional and will rob none-life insurance companies of their main business, not to mention the displacement of employees if GSIS will be granted exclusive right to issue CPTL insurance for all motor vehicles.
Braga, however, said the Department of Finance has taken the side of National Insurance Commission in its proposal of an alternative scheme that will give vehicle owners a free hand in choosing insurance providers.
To protect the interest of the public, National Insurance Commission would first verify the authenticity of the insurance policies issued by insurance companies prior to registration with the LTO thus giving the public a free hand in choosing but still checking the proliferation of fake policies.
This scheme, Braga said, is more palatable to the public, thus urging the council to support the call for the suspension of the implementation of the order.
The council passed the resolution with a majority vote.
