A Makati Regional Trial Court issued a 20-day temporary restraining order stopping the Reformed Compulsory Third Party Liability insurance plan of the Land Transportation Office.
Makati Regional Trial Court Judge Edgrado Caldona of Branch 65 granted the petition of Standard Insurance Co. Inc., directing LTO Assistant Secretary Alfonso Tan Jr. and the Insurance Commission to stop the implementation of LTO’s Memorandum Circular AVT-2015-1975, or the CTPL Insurance Project.
Issued and published last month, the CTPL circular is a mandatory insurance plan required by the LTO for vehicle registration. The “reformed” version is a modification of the CTPL that will be implemented starting January next year.
The new measure requires two nationwide administrators, which insurers said would eventually turn out as the insurer, and that the non-life insurance industry would become mere reinsurers.
The directive would convert all the non-life insurance companies into reinsurers, thus limiting their premium earnings. It would disregard the right of the insurers to do business and the right of the public to choose their insurer.
Standard Insurance said in its petition that the CTPL fell under casualty insurance, which it was “authorized to transact under its certificate of authority and, unmistakably, its right has been violated under the circular which granted to the administrators.”
Standard Insurance lawyer Reynaldo Geronimo said the designation of administrators was in excess of LTO’s jurisdiction and the circular infringed upon the constitutional provision against monopolies and restraint of trade.
Geronimo of the Romulo Mabanta Buenaventura Sayoc and Delos Angeles Law Offices said the circular might cause massive disenfranchisement of insurance providers and stakeholders engaged in CTPL insurance for several decades.
“The supposed initiative will only result to a monopoly in the auto insurance industry,” said Geronimo, adding the circular intruded into the right of the public to choose their insurer, in violation of the Amended Insurance Code.
Geronimo added the LTO had no authority to vest non-life insurance companies with blanket licenses to operate as reinsurers in violation of the insurance code and their certificates of authority issued by the Insurance Commission.
Earlier, the Philippine Insurers and Reinsurers Association (PIRA) opposed the insurance plan, claiming the proposal would form a monopoly after the LTO appoints the single administrator after a public bidding.