Non-life insurance companies has expressed concern that if the system being proposed by the Government Service and Insurance System (GSIS) takes over the compulsory third party liability (CTPL) insurance business, it would result in lower tax collections aside from questionable reporting of revenues.
In a press statement, the Philippine Insurance and Reinsurers Association (PIRA) stressed that both the GSIS and the Land Transportation Office (LTO) is a government agency, and that it is tax-exempt.
In a paid advertisement, the GSIS claims that it will collect taxes. But it is the LTO that will undertake all transactions with regards auto registration, including the CTPL under the GSIS proposal.
“It is unlawful for the LTO not to collect and remit taxes. Unless government disregards existing laws everytime they find it fit,” insurers pointed out.
PIRA claims that private insurers charge P560 premium for the CTPL from automobile owners applying for registration with the Land Transportation Office (LTO).
Of the amount, roughly P111.25 is in the form of various taxes and commissions. That means a potential revenue loss for the National Government of over P611 million annually.
Other private insurers charge P610 premium per vehicle, but an additional P375 in value-added tax and documentary stamp tax, brought the total cost of getting a CTPL to P985.
Likewise, insurers are concerned that there would be questionable collections.
In the same advertisement, the GSIS said that the present CTPL costs P900 versus their proposed P575. But insurers claim that they merely charge P560 premiums, meaning that the GSIS proposal is more expensive by P15.
Insurers argued that if the P575 includes taxes then it will mean lower tax revenue collections, or that the premiums are so low that the GSIS may not be able to put up reserves to meet future claims.
PIRA chairman Honorio Ramajo likewise claims that the fake CTPL problem had already been addressed by the association’s authentication and verification system, which is now in place at the LTO.
The same system addresses the certificate of cover (COC) switching problem.
“The only ones that can do that are in far-flung places where the system is not yet computerized. But once all branches are computerized, that cannot happen anymore,” Ramajo added.
Private non-life insurers and the GSIS are fighting over control of the P3-billion CTPL business.
Yesterday, PIRA filed a motion for reconsideration with the Makati Regional Trial Court.
In its motion, PIRA insisted that Makati RTC Judge Cezar Santamaria should decide on the case “based on merits” and not on technical reasons. Santamaria dismissed the case for being a “special civil action” when a “regular civil action” should have first been filed.
In short, he did not look into PIRA’s claims that Department of Transportation and Communication (DOTC) Order 2007-28 is unconstitutional because it will result in a monopoly of the insurance business.
The DOTC issued the order in July last year, integrating the issuance of CTPL with the registration of vehicles in the LTO.
Under the order, a single insurer will be tapped to provide all CTPL insurance policies for the country’s 5.5 million motor vehicles.
It soon became evident that this single insurer is the GSIS, which insures more than P1 trillion worth of government assets. It was also involved recently in a takeover attempt of the privately-owned Manila Electric Co. (Meralco).
Ramajo said private insurance companies would exhaust all legal options to prevent the implementation of the DOTC order.
“We will fight this out up to the Supreme Court,” he vowed. “The Constitution is against monopoly and restraint of trade, the two things which the DOTC order is perpetuating.” – TPT