By: Ben O. de Vera
The Insurance Commission is looking into the proposal to bring down insurance premiums collected from jeepney operators as part of the jeepney modernization program, Commissioner Dennis B. Funa said on Tuesday.
In a statement, Funa said the transport group Kilusan sa Pagbabago ng Industriya ng Transportasyon (Kapit) was seeking a reduction in the upfront and recurring costs being shouldered by jeepney operators, in particular the premium charged by insurance firms for comprehensive motor vehicle insurance.
“The Insurance Commission was informed by Kapit that it had spoken with several insurance companies which manifested their willingness to explore ways to make motor car insurance product more affordable,” Funa said.
Also, Funa said Kapit “proposed that insurance companies be allowed to extend loans to jeepney operators, transport groups, cooperatives and transport management companies, and for the said loans to be considered as admitted asset of the lender-insurance provider.”
According to Funa, Kapit told the Insurance Commission that the jeepney modernization program “will require huge amount of funding.”
Citing Kapit figures, Funa said the jeepney modernization program would entail P66 billion yearly in the next three years.
“In order for jeepney operators to avail of new vehicles, Kapit is proposing that insurance companies be allowed to extend loans to jeepney operators. With this proposal, jeepney operators will have more options on where to source the funding for the acquisition of new vehicles,” Funa explained.
As such, Funa said “the Insurance Commission requested the Philippine Insurers and Reinsurers Association Inc. (Pira), the umbrella organization of all nonlife insurance companies in the Philippines, to submit their comments” with regards Kapit’s proposal.
“Based on the initial comments from Pira, it expressed its willingness to lower the premiums being collected from jeepney operators but subject to the compliance with the minimum tariff rates imposed by the Insurance Commission,” Funa said.
“Insurance companies offering motor car insurance products are bound to observe the minimum and maximum range of premium rate for insurance coverage to be collected in motor car insurance. This means that insurance companies cannot charge premiums below the premium rate imposed by the Insurance Commission. At present the basic rate for loss and damage insurance coverage is at 1.5-2 percent of the value of the motor vehicle, while the premium for acts of nature coverage is subject to a minimum rate of 0.5 percent of the value of the motor vehicle,” according to Funa.
(Article and Image from http://business.inquirer.net/233418/ic-eyeing-cheaper-insurance-jeepney-operators)