GSIS will also be asked to explain the delay in the settlement of Napocor claims amounting to $41 million over the last five years.
The probe was triggered by revelations of Napocor president Jesus Alcordo at the Senate budget hearing that in the five years that Napocor had faithfully paid GSIS insurance premiums of about $47,296,500, GSIS had only paid $1.67 million of its total claims.
Testifying before the Senate finance committee chaired by Sen. John Osmeña, Alcordo said Napocor had complied with the required documentation to support their insurance claims, but GSIS required them to submit additional documents that delayed the process.
The difficulty in collecting insurance claims and the poor service it was getting prompted Napocor to explore options for cutting cost and getting proper service, and in the process stumbled upon the alleged premium padding by GSIS.
Alcordo’s claim that Napocor has been paying too high a price for their insurance coverage was supported by the assessment of a London-based insurance consultancy firm, Curie & Brown. The $13.5 million paid last year for Napocor’s 18-month Industrial All-Risk insurance policy, Curie & Brown said, should have been $4.93 million only, excluding the five percent share of GSIS.
Since GSIS could not handle an insurance policy as big as the Napocor, they only cover five percent of the insurance while the 95 percent is reinsured to other big insurance companies.
Sen. Osmeña III has called for a thorough probe of the case, but it was not clear which committee would handle it.
There are indications that Jardine Lloyd Thompson and Marsh McLennan, as the reinsurers of Napocor at that time, might be called to the Senate investigation. The two companies will be asked to present all documents involving GSIS dealings with them. Jardine have the 60 percent share and Marsh 35 percent of the Napocor insurance premiums.
Under RA 656 and Administrative Order 141, the GSIS General Insurance group has the mandate to provide the insurance requirements of government agencies, LGUs and government-owned companies.
The only check to the exclusive franchise given to the GSIS in Section 5 of RA 656 stating that the GSIS must be competitive with comparable coverage available in the private sector.
There are now moves to have RA 656 amended, if not abandoned, to ensure fair and reasonable costs that government or the people pay for insurance coverage.