Court stops GSIS take over of CTPL insurance

The Mandaluyong Regional Court issued a 20-day temporary restraining order against GSIS from implementing its plan to take over the issuance of CTPL insurance from private insurance companies.  The court will study the merits of a petition filed by Ms. Belinda Martezano, an insurance agent, to stop the GSIS from monopolizing the CTPL business in the country.

GSIS move, with the approval of the DOTC and Insurance Commission, is designed to stop the proliferation of fake CTPL insurance policies.  However, it would affect the income of the private insurance companies and their agents and brokers.

Read the news:

Court stops GSIS car insurance plan
By Michelle Remo
Philippine Daily Inquirer
First Posted 10:13am (Mla time) 07/26/2008
 

Compulsory Third Party Liability Insurance

The fight over who should write the CTPL insurance is not yet over.  What’s the controversy, in the first place?

The law compels the motor vehicle owner to procure a valid Third Party Liability Insurance and present the insurance policy upon filing of application as a requirement in the registration with the Land Transportation Office (LTO).  However, there are unscrupulous entities or persons who are issuing fake insurance policies.  To curb this malpractice, several systems, procedures have been devised and implemented.  But these systems and procedures were no match to the issuers of fake insurance policies.

And now, another solution is being offered - the Government Service Insurance System (GSIS) shall monopolize the issuance of the CTPL insurance policies. The private insurance companies are decrying this solution.

First, it’s COMPULSORY to procure a third party liability insurance.  Now, it would become COMPULSORY to procure it from GSIS only.

—————–

Mr. Honesto General wrote a column entitled: “CTPL: Cure worse than the disease” in the Philippine Daily Inquirer.  He first mentioned the history of CTPL; then his opinion.  I am encouraging you to read it here to better understand the CTPL.

The Principle of Subrogation

The aggrieved party has the legal right to recover from the offending party.  However, if the aggrieved party has insurance on his property, claimed from and indemnified by the insurance company, the legal right to recover is transferred to the insurance company.  This is called “subrogation”.  Without “subrogation” the insured can still recover from the offending party; thus he could profit from his misfortune.

Once the insurance company indemnified the insured, the insured will sign a document subrogating the right to recover to the insurance company.

The principle of subrogation is applicable to contracts of indemnity only.

Trade Credit Insurance

Last Friday, I attended the “Briefing / Seminar on Credit Insurance” conducted by Philexim and COFACE.  And, I’d like to share what I’ve learned.

Most export transactions now use an “Open Account” as the term of payment over “advance payment”, “cash on delivery”, and “consignment”.  An “Open Account” is a payment of international trade transactions, in which:

• The seller ships the goods and forwards the documents directly to the buyer
• The buyer clears the goods upon arrival
• The buyer arranges for payment. 

The seller loses control of the goods as soon as they are dispatched, because he/she has to trust that the buyer will remit the funds.

Exporters should extend this type of payment to importers, whom they know and trust.  They must also be comfortable with the commercial and country risks associated with the transaction. However, the risk of non-payment or default still exists.  And, the exporter must protect his account receivables.  He can do this through Trade Credit Insurance (TCI).

TCI covers non-payment of account receivables attributable to the following:

    1.    Buyer (Credit)
            a.    Insolvency
            b.    Protracted default

    2.    Country in which it operates in (political)
            a.    Government Moratorium
            b.    Non-transfer of Risks
            c.    Cancellation of Import License
            d.    Occurrence of War or Revolution

The following are not covered:

    1.    Buyer (Credit)
            a.    Non Acceptance of Goods
            b.    Trade Dispute

    2.    Country in which it operates in (political)
            a.    Devaluation or Depreciation of Currencies

If you are dealing with an “Open Account” payment system, it is advisable to cover it with Trade Credit Insurance. It is an effective credit management tool in time of uncertainties.

The Principle of Indemnity

Indemnity means the restoration of financial position of the insured after the loss as he enjoyed immediately before the loss.  It also means an exact financial compensation.  However, the indemnity payable should not exceed the insurable interest or the insured amount, whichever is lesser, at the time of the loss.  No one should profit under his insurance policy as a result of his/her misfortune.Indemnity is not applicable to life and personal accident insurance contracts. The reason being it is impossible to provide exact financial compensation for loss of life or limb.

The insurer has the option to provide indemnity in the form of cash, replacement, repair or reinstatement to discourage fraud or suspicious claims.

As defined above, indemnity is the exact compensation.  However, it may be reduced due to actual sum insured, insufficient sum insured and policy deductibles. Also, the salvage shall be considered in determining the indemnity.

Look of the Year Contest

There is a unique beauty contest that is going on over the web for the young and beautiful – the Look Of The Year Contest. 

Anybody who has the winning looks, anywhere you are in the world, can join this exciting contest.  Joining is easy as walking in the park. Simply submit your most beautiful pictures to http://www.lookoftheyear.com.  And the judges who will rate your pictures are the millions of visitors of LookOfTheYear.com.

We know that there’s only one winner per category.  But, even if you would not end up as one of winners, this is a great opportunity to expose yourself, be discovered, and become a famous model.

Join now!  The four categories are:

• Girls 14-19
• Women 19+
• Boys 14-19
• Men 19+

The Principle of Utmost Good Faith

Utmost Good Faith means that each party to a proposed insurance contract is legally obliged  to reveal to the other all information and materials facts, which would influence the other’s decision to enter into the contract, whether such information is requested or not.

Concealment and Misrepresentation.

Concealment is the intentional failure to reveal a material fact, which would influence a prudent underwriter in deciding whether to accept or reject a risk and what rate to charge and what conditions to impose.

Misrepresentation is the giving of false or misleading information on the material fact.

Concealment and/or misrepresentation gives the aggrieved party the right to avoid the contract.

The principle of Insurable Interest

Insurable Interest is very important in insurance.  Without insurable interest you cannot insure a property or life.  Even you were able to insure a property or life sans the insurable interest, it will be tested in the event of claim.  If it is proven that an insured or assured has no insurable interest, he could not claim from the insurance.

You have insurable interest on the property or life, if in the event of loss or death, it will cause you direct financial loss.

Examples of who have Insurable Interest.

• In property, the owners: authorized agents, administrators & executors, husband and wife (in each other’s property), mortgagors & mortgagees.
• In the lives of people: husband and wife, creditors and debtors, partners in a partnership business, corporations in its key personnel.
• In liability: any person in any potential liability he may incur.

The basic insurance principles

So you already insured your property and are thinking that if something bad happened to your property, your insurer would pay you for the damages or replace the property insured.  The answer is yes, provided, the following basic insurance principles are present.

1. The principle of Insurable Interest;
2. The principle of Utmost Good Faith;
3. The principle of Indemnity;
4. The principle of Subrogation;
5. The principle of Contribution;
6. The principle of Proximate Cause.

We shall discuss in details these principles one by one.

Insurance terms

To fully understand insurance, let us take a look at the meanings of the following basic terms, which you would encounter from time to time.

“Insurance” -  Insurance is a CONTRACT or arrangement between two parties, called INSURED and INSURER.  The Insurer, in return for a financial consideration called the PREMIUM agrees and undertakes to INDEMNIFY the Insured against LOSS, DAMAGE to the property insured or LIABILITY that may happen during an agreed and specified PERIOD of time, which is PROXIMATELY CAUSED by a PERIL insured against.

“Peril” -  It is a CAUSE of loss, damage or liability, such as fire, earthquake, flood, etc.

“Hazard” -  It is a CONDITION that tends to create or increase the CHANCE of loss.  There are two types of hazards:

1. Physical Hazard – The characteristics of the subject matter of insurance that make it vulnerable to loss.
2. Moral Hazard – The honesty or integrity of the owner of the property insured or to be insured.

“Risk” - It is the PROBABILITY or chance that a loss would occur.  RISK is also used to refer to the PERSON or property insured to be insured.  It is also used interchangeably with “Peril”. When we refer to a subject matter as “risky”, it means that the probability of loss is HIGH.

Classifications of Insurance

The most common are:

    1.  Insurance of Property

            a)  Structure - covers house, building, warehouse or other structure;

            b)  Transportation - covers car, motorcycle, bus, truck, airplane, ship, equipment;

            c)  Goods - covers goods in transit or in storage.

    2.  Insurance of Liability

            a)  Liability to Third Party – Legal, Civil, or Criminal.

    3.  Insurance of Person

            a)  Life – covers death - natural or accidental;

            b)  Accident – covers accidental death, disablement, dismemberment, injuries;

            c)  Medical or Health – covers sickness, illness, injuries.

The Need for Insurance

Life is full of uncertainty.  No one can really predict what would happen an hour, or day, or month, or year/s from now (except perhaps “Madam Auring” – LOL!).

An accident may happen anytime and anywhere.  And, we couldn’t prevent it from happening.  We could physically protect our properties or be careful in our actions.  But these are not guarantees that our properties wouldn’t be lost or damaged and/or ourselves harmed.

Maybe, you were careful and defensive in your driving and that may guarantee that you wouldn’t hit another vehicle.  But, what if another vehicle fell on your car from a skyway or rear-ended your car.  Do you have extra money for the repairs or replacement?  Or, you may have installed safety gadgets in your home to prevent fire.  Have your neighbors done the same?

Buying an insurance is buying for your “peace of mind” and the assurance that, if an unfortunate incident happened to your property, you have insurance to shoulder the cost of the repairs or replacement (or most of it).

What is Insurance?

What is INSURANCE?  Basically, it is a PROMISE by one party to PAY another party for LOSS, DAMAGE or HARM sustained by the latter in return for a FEE.

The promiser is called an "INSURER" and the promise is written in a contract called an "INSURANCE POLICY". 

Loss, damage or harm must be caused by a "RISK INSURED AGAINST", e. g.,  fire, typhoon, flood, collision, theft. 

The promisee is called an "INSURED", and the fee is called a "PREMIUM".

The Insurance Code of the Philippines (PD-612) defines the Contract of Insurance:

Sec. 2. [1] A "contract of insurance" is an agreement whereby one undertakes for a consideration to indemnify another against loss, damage or liability arising from an unknown or contingent event.

Sec. 49. The written instrument in which a contract of insurance is set forth, is called a policy of insurance. 

 

Bloggerwave.com

Do you enjoy blogging?  Do you want to enjoy it more while earning some extra money?  There are several “paid to post” online providers available that you can try.

As recommended by some virtual friends, I signed up with bloggerwave and registered my three blogs.  You are allowed to register up to five blogs.  Bloggerwave is aiming to be Europe’s biggest advertising media on blogs.  Of course, this objective could not be achieved without the help of the bloggers.  In return, bloggers would benefit from it by having more and more jobs available for them, which means more money for the bloggers.

As a blogger, do not pass the opportunity of earning money while blogging. Visit and sign up with Bloggerwave and earn money. 

This insurance blog resumes

I did try to maintain this insurance blog.  But due to time constraints, I was not able to post as per my schedule, which was weekly (every Monday).  But, I have decided to continue on with this blog.  Please bear with me.

Deficient non-life insurance companies

MANILA, Philippines - Non-life insurance companies are required to comply with the P100-million (US$2.4 million) minimum net worth.  However, there are still six companies who have not yet complied with this requirement but had committed to fill their deficiencies this year.

The deficient non-life insurers are: Paramount Life and Gen., CAP Gen. Insurance Corp., CA Life Insurance Corp., CICI General Insurance Corp., Covenant Assurance Co. Inc. and Far Eastern Surety Ins. Co.  If they would fail to meet the requirement this year, these companies would be automatically stripped of their operating licenses.

Watch out for these companies.

Authorized insurance companies to issue CTPL insurance

The Insurance Commission (IC) , in its letter of September 7, 2007 signed by Commissioner Eduardo Malinis, has furnished the Land Transportation Office (LTO) the official list of the 90 non-life insurance companies authorized by the IC to issue CTPL insurance policies.

These companies are:

1. ACE Insurance of North America
2. AFP General Insurance Corp.
3. Alliedbankers Insurance Corp.
4. Alpha Insurance & Surety Co., Inc.
5. Asia Insurance (Phils.) Corp.
6. Asia United Insurance, Inc.
   
7. Asian Life & General Assurance Corp. (Non-Life Unit)
8. Bankers Assurance Corp.
9. BF General Insurance Co.
10. Blue Cross Insurance, Inc
11. BPI/MS Insurance Corp.
12. CAP General Insurance Corp.
13. CCC Insurance Corp.
14. CICI General Insurance Corp.
15. Centennial Guarantee Assurance Corp.
16. Cibeles Insurance Corp.
17. Commonwealth Insurance Co.
18. Covenant Assurance Co., Inc.
19. Corporate Guarantee & Insurance Co., Inc.
20. Country Bankers Insurance Corp.
21. Eastern Assurance & Surety Corp.
22. Empire Insurance Co.
23. Equitable Insurance Corp.
24. Far Eastern Surety & Insurance Co., Inc.
25. Federal Phoenix Assurance Co., Inc.
26. Finman General Assurance Corp.
27. First Integrated Bonding & Insurance Co., Inc.
28. First Nationwide Assurance Corp.
29. FLT Prime Insurance Corp.
    
30. Fortune General Insurance Corp.
31. Generali Pilipinas Insurance Co., Inc.
32. Great Domestic Insurance Company of the Phils., Inc.
33. Industrial Insurance Co., Inc.
34. Insurance of the Philippine Islands Co., Inc.
35. Intra-strata Assurance Corp.
36. Investors Assurance Corp.
37. Liberty Insurance Corp.
38. MAA General Assurance Phils., Inc.
39. Malayan Insurance Co., Inc.
40. Manila Insurance Co., Inc.
41. Manila Surety & Fidelity Co., Inc.
42. Mapfre Insular Insurance Corp.
43. Mercantile Insurance Co., Inc.
44. Meridian Assurance Corp
45. Metropolitan Insurance Co., Inc.
46. Monarch Insurance Co., Inc.
47. New Hampshire Insurance Co.
48. New India Assurance Co., Ltd.
49. Northwest Insurance & Surety Co., Inc.
50. Oriental Assurance Corp.
51. PGA Sompo Japan Insurance, Inc.
52. PNB General Insurers Co., Inc.
53. Pacific Union Insurance Co.
54. Paramount Life and General Insurance Corp.
55. People's General Insurance Corp.
56. Perla Compañia de Seguros, Inc.
57. Petrogen Insurance Corp.
58. Philippine American Life and General Insurance Co. (Non-Life Unit)
59. Philam Insurance Co., Inc.
60. Philippine British Assurance Co., Inc.
61. Philippine Charter Insurance Corp.
62. Philippine Fire & Marine Insurance Corp.
63. Philippines First Insurance Co., Inc.
64. Philippine General Insurance Corp.
65. Philippine Phoenix Surety & Insurance, Inc.
66. Pioneer Asia Insurance Corp.
67. Pioneer Insurance & Surety Corp.
68. Pioneer Intercontinental Insurance Corp.
69. Plaridel Surety & Insurance Co.
70. Premier Insurance & Surety Corp.
71. Prudential Guarantee and Assurance, Inc.
72. QBE Insurance (Philippines), Inc.
73. R & B Insurance Corp.
74. Reliance Surety & Insurance Co., Inc.
75. Republic Surety & Insurance Co., Inc.
76. Seaboard-Eastern Insurance Co., Inc.
77. Security Pacific Assurance Corp.
78. Solid Guaranty , Inc.
79. Standard Insurance Co., Inc.
80. Sterling Insurance Co., Inc.
81. Stronghold Insurance Co., Inc.
82. Summit Guaranty & Insurance Co., Inc.
83. Tokio Marine Malayan Insurance Co., Inc.
84. Travellers Insurance & Surety Corp.
85. UCPB General Insurance Co., Inc.
86. United Insurance Co., Inc.
87. Utility Assurance Corp.
88. Valuegen Financial Insurance Co., Inc.
89. Visayan Surety & Insurance Corp.
90. Western Guaranty Corp. 
    

With the Commission's continuous monitoring of these entities, the list will be revised as needed.

Insurance Commission changes its position on the CTPL issue

The Insurance Commission (IC), with its new head - Atty. Ernesto Malinis, has changed its earlier position on the Compulsory Third Party Liability (CTPL) issue.  It now favors the proposal of the Government Service Insurance System (GSIS) to be the sole provider of this insurance policy to eliminate the issuance of fake CTPL insurance policies

"I studied the proposals (to address the rampant sale of fake CTPL policies), and saw the GSIS model to be superior than the others," said the new insurance commissioner.

The former IC head, Ms. Escobillo, together with non-life insurance firms, staunchly opposed the proposal for GSIS to monopolize the CTPL business. 

The Philippine Insurers and Reinsurers Association Inc. (PIRA) filed a petition before a Makati Regional Trial Court (RTC), who issued a issued a preliminary injunction on the DOTC order.  PIRA was saying the DOTC order was unconstitutional because it called for a monopoly.

However, Malinis said: "Not all monopolies are unconstitutional.  Monopoly is all right as long as it is regulated."

Malinis said that should the court eventually decide in favor of the GSIS proposal, then the IC would work on its immediate implementation.

Source: business.inquirer.net 

The Insurance Commission has new chief

It was discussed in my article "The Insurance Commission" last August 6 that the Insurance Commissioner was Ms. Evangeline Escobillo.   Well, she is no longer the Insurance Commissioner.

President Gloria Macapagal - Arroyo reappointed Atty. Eduardo Malinis as the new Insurance Commissioner vice Ms. Escobillo.

The announcement was made by Secretary Margarito Teves last Friday, confirming the earlier statement of Executive Secretary Eduardo Ermita.

Teves said: 

We thank Vangie (Escobillo) for her contribution to the IC, especially in pursuing needed reforms to strengthen the insurance industry. We look forward to working closely with Commissioner Malinis and are confident that he will continue implementing needed reforms at the IC for the greater protection of the public and better accessibility of insurance products to the common people.

Mr. Malinis was first appointed as the Insurance Commissioner in 2002 until 2005.

The insurers win the first round

Judge Cesar Santamaria of the Makati Regional Trial Court (RTC) has issued a temporary restraining order (TRO) with respect to the petition filed by the Philippine Insurers and Reinsurers Association (PIRA) opposing the DOTC ‘s Order 2007-28 issued last July 15, 2007 (read the story "Insurers versus DOTC" here).

The DOTC order provides for only one insurance company to handle all CTPL insurance in the Philippines to address the problem of fake CTPL insurance policies.  DOTC preferred National Reinsurance Corporation of the Philippines, a subsidiary of GSIS, to issue all the CTPL policies.

The TRO is effective for 20 days, while the court is reviewing the merits of the claim by PIRA that the DOTC’s order would create a monopoly in the CTPL insurance and, therefore, unconstitutional.

CTPL insurance is being required for the registration of a motor vehicle with the Land Transportation Office (LTO).  It covers the possible liability of a vehicle owner to third party for bodily injury and/or death up to P100,000.00.

Source: inquirer.net