GOTCHA By Jarius Bondoc, The Philippine Star, Monday, July 21, 2008
One group of insurers opposes unifying the Compulsory Third Party Liability insurance under the GSIS. They claim that if GSIS monopolizes the coverage of motor vehicles against bodily harm, at least 60,000 workers will lose jobs.
Upon reading that, I asked myself, is that how many — 60,000 people — in the CTPL racket? I call it a racket because many CTPL sellers are fly-by-night. With no permanent offices, they just hang out at Land Transport Office (LTO) branches, then disappear at sundown. You can’t find them when you need to indemnify a person hurt or killed by your vehicle.
But before all that, why is there CTPL? The government in the ’70s required that all cars, jeepneys, buses, trucks and tricycles be covered by such insurance upon registration. It assured that if a vehicle accidentally hurts or kills a person (other than its own driver or passengers), cover of up to P50,000 can be paid. Good objective: the vehicle owner will have a ready source to recompense the victims.
I bet you, though, that in all these years you’ve been driving, with several bumps and scrapes to your name, you’ve never run over a person. You haven’t used your annually renewed CTPL policy. You can only praise God for it. CTPL racketeers thank luck that nobody has noticed them — till now.
For, the question arises: where does the more than P1,000-CTPL paid each year for each of the 5.5 million registered vehicles go?
Before answering that, let’s make this clear: a CTPL costs only P950. You must be wondering why you’ve been paying P1,100-P1,300 each year. That’s because the CTPL sellers, mostly unregulated, tack on all sorts of unauthorized fees to the basic charge. More on that later.
The total take of the insurance trade was P26.05 billion in 2006, based on Insurance Commission (IC) records. Of that, 6.3 percent, or P1.64 billion, came from CTPL. By law, insurance firms must deposit part of the funds in escrow for indemnities. But the CTPL racketeers don’t do that. They simply pocket the payments from unsuspecting vehicle registrants, then disappear.
Most of the CTPL certificates of coverage (COCs) are in fact fake. Comparing LTO and IC records, it appears that CTPL racketeers do not even report the COCs. From GSIS studies, there are more missing COCs than reported ones:
| | 2004 | 2005 | 2006 |
| Registered vehicles (LTO) | 4,760,593 | 5,059,753 | 5,530,055 |
| Reported COCs (IC) | 1,616,689 | 2,265,040 | 2,561,806 |
| Unreported/missing COCs | 3,143,904 | 2,794,713 | 2,769,768 |
But back to the claim that 60,000 CTPL-dependent employees will go hungry when GSIS takes over the system, figures are available too. The IC 2006 annual report states that there were 10,837 licensed insurance agents and 275 general insurers, all registered as intermediaries. That year about P6.27 billion in commissions were paid out to intermediaries. Of the total, 2.6 percent, or P164.3 million, were commissions from CTPL sales. Distributing the P164.3 million among the roughly 11,000 intermediaries means that they each earned P14,433 that year, or P1,244 a month. That amount was barely enough for transportation costs of a CTPL agent to service the needs of his clients. More telling, that amount could never be called a job. The 60,000 workers, if there really are that many of them, never had decent jobs to lose, to begin with.
In fact, the commission from individual CTPL sales is so small. From private cars and public utility vehicles, which represent 47 percent of total registered units, the commission is only P49 per policy. For tricycles and motorcycles, 48 percent of vehicles, it’s a lower P19 per COC.
Legit insurers consider selling CTPLs an “indispensable nuisance.” They profit so little from it, compared to clerical and administrative costs of CTPL policies. But they must service the clients just the same because the CTPL is required when the latter take out comprehensive insurance policies for motor vehicles, property and marine equipment.
GSIS president Winston Garcia says they will not really monopolize the CTPL business. The agency will still reinsure the policies with private firms, which is why another group of insurers avidly supports putting it under one roof.
The only remaining issue is how GSIS will service CTPL indemnity claims. That’s easy, Garcia says. GSIS has a nationwide network of 48 branches and 78 field offices, a 24/7 call center to all major cities, and accredited hospitals and clinics.
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