Thursday, July 17, 2008

Car Insurance: The Source of Graft at LTO

Every year, a motor vehicle is required to be registered at the Land Transportation Office (LTO). With this registration, a Compulsory Third Party Liability (CTPL) insurance policy is mandatory thereby providing a chance for LTO personnel to serve as agent or broker of insurance company and choked the public with exorbitant insurance fees. The car owner loses the freedom of choice as the fixers, disguised as agent and representing the LTO employee, will make it hard for you to satisfy the requirements unless you buy the CTPL policy from them.


I was once a victim of these practices when I registered a Toyota Corolla car, model 1997. I was made to pay P850.00 for CTPL insurance policy. It was already late when I came to know that a regular amount of CTPL policy is only P560.00 –the annual premium is P448.65 and the taxes are P111.35. I was unaware that I have already bribed LTO with P290.00 difference. Take for granted that the employee managed to register ten vehicles a day, it will be a whopping P2900.00 daily take and not to mention the rampant selling of fake CTPL policies. There are 5,530,052 vehicles registered as of December 2007, per LTO statistics, and billions of pesos will be lost to fake CTPL transactions for the year 2008. (Pls. Read my related post, “Fixers at LTO are Dressed in Uniform”)


The Department of Transportation and Communication, overseeing the functions of LTO, will be integrating the CTPL insurance policies into the registration process of motor vehicles. It authorizes the National Reinsurance Corporation, a subsidiary of Government Service Insurance System (GSIS), as the insurer of vehicles under the CTPL policies –following the Makati Court dismissal of the petition to stop the transfer of CTPL to GSIS filed by the Philippine Insurers and Reinsurance Association (PIRA). With the planned transfer, GSIS, a state-run pension fund, will provide the CTPL insurance coverage of all motor vehicles. “Registrant will only have to go to LTO instead of dealing with 120 or more insurance companies, it will also eliminate fixers,” the GSIS President, Winston Garcia, have said; as they prepare the monopoly of 3.5 billion peso motor vehicle insurance business.


LTO will implement the new registration procedure by August, this year, amid the defiant move of the public transport operators and drivers’ associations. There are 400,000 public utility transports in the country today, as claimed by transport federation FEJODAP, and stated that they have no problem dealing with the private insurance companies. With the transfer, they presumed they will be “hard hit” in claiming the insurance proceeds as they have heard the usual complaint of beneficiaries dealing with GSIS. Meanwhile, PIRA said: “This would constitute monopoly and is therefore unconstitutional.” They claimed that with GSIS takeover, there will be a loss of an estimated 60,000 industry jobs which mainly consist of insurance agents selling CTPL policies. However, the Insurance Commission, through its commissioner, Atty. Eduardo Malinis, favours the GSIS takeover to eliminate the issuance of fake CTPL insurance policies. He further said: “Not all monopolies are unconstitutional. Monopoly is all right as long as it is regulated … the Insurance Commission would work out its immediate implementation.”


It should be, likewise, put into consideration that vehicle with an appropriate insurance Certificate of Cover (those with comprehensive coverage) should no longer be required to have the CTPL policy (which covers bodily injury and/or death up to P100,000) as being enjoyed by owner of a brand new car with a 3-year registration privilege. DOTC should look into this to unburden the car owners of multiple fees requirements which are the source of graft at LTO.


With this new arrangement, the public will be looking forward as to whether GSIS can accomplish the expected elimination of graft, the unscrupulous insurance practices, and the speedy release of insurance proceeds to the aggrieved parties.

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