Field day for peddlers of fake TPL insurance

WORRIED ILONGGOS: Frantic friends from Iloilo City have sent me an SOS about their city likely to be plunged into darkness or hit by scattered blackouts by Dec. 15 when the 72-megawatt diesel facility servicing the place shuts down.

As the problem has something to do with power rates and viability, the Energy Regulatory Commission may want to step in and do something fast.

The diesel facility owned by the Panay Power Corp. (PPC) reportedly has been losing hundreds of millions of pesos since September as a result of underpayments by its off-taker, the Panay Electric Co. (PECO), the sole power distributor in Iloilo City.

This was a consequence of a ruling of the ERC last September that the allowable power rates charged by PECO be pegged to that of the National Power Corp. – in effect, slashing it by P2 per kilowatt-hour.

As a result, PECO reportedly has been unable to pay PPC the bill as agreed upon in their contract. Reeling from large uncollected payments, PPC said it may be forced to shut down in mid-December as its fuel supply can last only that long.

PPC Vice President Arman Lapuz was quoted as saying that current payments by PECO are not even enough to cover fuel costs, thus the painful decision to shut down.

This is a tricky proposition for the ERC as it must come up with a solution that balances the interest of consumers and that of power generators and distributors who must earn a fair and just return on their investments.
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FAKE TPL: In 2003, there were some 4.3 million motor vehicles registered. The premium for their compulsory Third Party Liability (TPL) insurance should have been P2.5 billion, on which the government could have collected P579 million in taxes.

But instead of P579 million, the government was able to collect only P310 million.

How was the government cheated of P269 million from TPL premiums? That was by having the insurance companies report only P1.3 billion of the actual P2.5 billion collected in TPL premiums.

Industry sources said the "missing" TPL insurance payments included those paid by unwary vehicle owners for TPL policies issued by bogus or unscrupulous insurance companies.

The government and the unsuspecting buyers of fake TPL insurance policies were both victims. The government was deprived of income, and vehicle owners who paid good money for TPL insurance were actually not covered without knowing it.

In many cases, policies were discovered to be bogus when claims were made and neither the insurance firms nor their fly-by-night agents – many of whom even solicited business near Land Transportation Office registration units – could be located.
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CLEARINGHOUSE: How does recently appointed Insurance Commissioner Evangeline Escobillo plan to curb this large-scale cheating?

Industry sources have it that Ms Escobillo seems disposed to keeping the status quo by adopting a new setup that is not really new because it retains even the shady characters that are selling bogus TPL insurance.

No matter how Ms Escobillo tries to spin the TPL issue, she would end up allowing insurance buccaneers to sell insurance that they do not honor and to continue shortchanging the government.

She proposes to stop the sale of bogus TPL by creating a clearinghouse that would, according to her, weed out fake insurance companies. Under the scheme, TPL payments will also be coursed through banks, purportedly to combat fraud.

The problem with her scheme is that she wants her office, the Insurance Commission, to join forces with members of the Private Insurers and Reinsurers Association (PIRA) in putting up this clearinghouse.

But would not this clearinghouse be a farce if it would have among its members the very insurance firms that should be regulated in the first place? It would be a case of the right hand pretending to check on the left.
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REWARDING CRIME: For championing PIRA, Ms Escobillo may be courting trouble and the scrutiny of the Ombudsman. There could be conflict of interest if Ms Escobillo tries imposing sanctions on erring members of the clearinghouse working with her.

Finance Secretary Margarito Teves should have examined more closely the recommendation given him that the Government Service Insurance System should not be allowed to go into the TPL business.

The idea was for the GSIS to lower TPL rates by sheer volume and improved efficiency. The state firm also puts its name on the line by promising prompt and honest service.

The opposing argument is that the GSIS must not compete with the private sector. The line goes that if GSIS sells TPL insurance with more reasonable – and therefore more attractive – rates, that move would displace 130,000 workers of private insurance firms.

With bogus agents selling bogus TPL insurance all over town, how can legit workers number 130,000? Assuming they are that many, why should the IC coddle those who have been fooling both the government and motor vehicles owners?
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MRT-7 UPDATE: After five years of rigid evaluation, government planners have given due course to the $1.2-billion MRT-7 project that opens a new rail track and a dedicated highway linking Bulacan province, Caloocan City and Quezon City.

Officials familiar with the project said the project proponents had met the 27 conditions set by the government and are now ready to face the final test that would possibly include the so-called Swiss Challenge.

This is a last-stage provision for testing the projected awarding of the contract by opening the proponents to a challenge from any qualified entity wanting to submit a better bid.

The MRT-7 transport-commercial-housing mixed project is the single biggest infrastructure investment in the country not covered by a government guarantee.

The National Economic and Development Authority has given the go-signal for the construction of its elevated rail system, which will be complemented by a highway in Bulacan and a housing-business center near Tala where the road links up with the rail system.

From Caloocan, the elevated rail goes to Quezon City where it connects nears North Ave. to the MRT-2 line running along EDSA. Later, MRT-2 itself would also be connected to Balintawak by another rail line.
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