MANILA, Philippines - Non-life insurance companies are taking legal action against the Land Transportation Office (LTO) for issuing a circular deemed to form an “insurance cartel.”
A group of insurance agents has already sought a temporary restraining order (TRO) against LTO Memorandum Circular 2015-1975, which introduced the “Reformed Compulsory Third Party Liability (CTPL) Insurance.”
The Insurance Commission (IC), meanwhile, is calling for a dialogue between all stakeholders.
The CTPL is a mandatory insurance cover under Batas Pambansa 74, covering all types of vehicles.
Under the revised version, a pool of insurers will be formed instead of the open market system presently practiced. A national administrator will oversee the pool.
The insurers said that is tantamount to forming a “cartel” and the administrator is assuming responsibilities only mandated to the IC.
Philippine Insurers and Reinsurers Association chairman Michael Rellosa said the insurance companies have voted overwhelmingly to take all possible legal measures to oppose the circular. PIRA is the only non-life insurance organization recognized by government.
“Our members recognize that the LTO does not have the legal right to regulate insurance business in anyway since such power and responsibility reside only in the Insurance Commission under the revised Insurance Code,” Rellosa said.
He added the LTO can not limit the business of issuing CTPL insurance cover to a select number of insurance companies, and worse, appoint an administrator that virtually takes over the function of the IC.
The insurers further argued the circular simply establishes a monopoly thus destroying the essence of a free market.