The Insurance Commission asked the Land Transportation Office to justify a directive regulating the compulsory third-party liability insurance of motor vehicle owners.
The IC, in a letter addressed to LTO Assistant Secretary Alfonso Tan dated Nov. 24, said the new directive could contravene existing laws and regulations relating to CTPL Insurance and insurance companies.
“LTO is requested to explain the reason behind or justification for requiring administrators to issue the CTPL and authorizing the same to regulate the issuance of CTPL,” Deputy Insurance Commissioner Dorothy Calimag said in the letter.
“The Insurance Commission must continue to exercise regulatory supervision over insurance companies and insurance agents,” she said.
The IC also called LTO’s attention over the “cartelized monopoly” of the CTPL insurance, restraint of trade and unfair competition among insurance agents.
“The LTO is requested explain how the CTPL will ensure that insurance companies who are not accredited as administrators will nevertheless be able to participate in the CTPL business, within the bounds of law,” the letter read.
“Another issue raised is that the creation of administrator in effect limits those that can actually sell CTPL policies in contravention of their certificates of authority,” Calimag added.
The copy of the letter was given to reporters over the weekend.
The LTO issued MC 2015-1975 early this month, mandating the implementation of reformed CTPL insurance system.
The circular said the issuance of CTPL insurance policies and administration of payment and settlement would be assigned only to insurance pools, administered by national administrators.
The administrators will issue and settle CTPL to motor vehicle owners to ensure the legitimate insurance coverage of motor vehicle owners, proper payment and remittance of taxes and expeditious settlement of claims.
The CTPL insurance policy is a requirement before any motor vehicle can be registered with LTO to protect the general public from accidents.
The Philippine Insurers and Reinsurers Association said LTO’s move was “a cartel that would monopolize issuance of insurance” to motor vehicle owners.
“Our members recognize that the LTO does not have the legal right to regulate insurance business in any way since such power and responsibility reside only in the Insurance Commission under the revised Insurance Code,” PIRA president Michael Rellosa said.
The LTO issued the new circular following the complaints from motorists about fixers selling insurance policies without presenting proof they are licensed by the Insurance Commission.
“We don’t know about this illegitimate insurance companies which charge different rates. And vehicle owners find it difficult to make their claims against these insurance firms. The LTO will strictly regulate this,” LTO spokesman Jayson Salvador said.
