Insurers hail IC proposal on sale of car insurance policy

The Philippine Insurers and Reinsurers Association (PIRA) has welcomed the proposal of the Insurance Commission (IC) to implement a clearing house system for the sale of motor vehicle insurance policies.

The proposal is intended to curb the rampant sale of fake compulsory third party liability insurance policies (CTPL).

The system is expected to be implemented early next year.

"We are in full support of this," PIRA board of trustee Michael Rellosa said. The PIRA accounts for 95 percent of insurance companies in the country.

Rellosa said the industry will also launch a tri-media campaign to inform the public that they can pay their CTPL through accredited banks including Union Bank of the Philippines, Rizal Commercial Banking Corp. and Bank of the Philippine Islands.

The clearing system is expected to deliver P3 billion worth of revenue next year from the sale of CTPL policies to legitimate insurance companies, compared with P1.3 billion generated this year.

The insurance industry should have collected P2.7 billion worth of revenues from the vehicle insurance business this year, but about P1.4 billion were not properly recorded partly because of fraudulent sale of CTPL policies that duped vehicle owners.

Under the clearing house system, vehicle owners will have to pay the amount of insurance premiums they buy through accredited banks.

The banks will then forward the data to a CTPL Processing Center (CPC) which will determine whether the insurance policies bought by a vehicle owner are legitimate or fake.

After clearing the sale of an insurance policy, the CPC will forward the information to the database system of the LTO.

Accredited banks will place CTPL policy payments to the bank accounts of the concerned insurance companies.

Under the existing system, the Land Transportation Office (LTO) does not have sufficient means to determine whether a CTPL policy is fake. Vehicle owners will also have an option to buy their CTPL policies through electronic payment systems.