IC studies proposal to lower insurance costs for jeepney operators

THE INSURANCE Commission (IC) is studying the proposal to trim premiums imposed on comprehensive motor insurance, and allow insurance firms to provide credit to jeepney operators, amid the government’s jeepney modernization program.

In a statement on Tuesday, Insurance Commissioner Dennis B. Funa said transport group Kilusan sa Pagbabago ng Industriya ng Transportasyon (KAPIT) has requested the lowering of insurance premiums charged by insurers for comprehensive motor vehicle insurance to reduce costs of jeepney operators.

“As to the proposal on the lowering of insurance premiums, the IC was informed by KAPIT that it had spoken with several insurance companies which manifested their willingness to explore ways to make motor car insurance products more affordable,” he was quoted saying in a statement.

In addition, Mr. Funa said KAPIT also proposed non-life insurance firms to be allowed to extend credit to jeepney operators, transport groups, cooperatives, and transport management companies, with these loans to be considered as “admitted asset” of the insurer.

“KAPIT manifested that the modernization program will require huge amount of funding. 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,” he said.

The IC is set to meet with KAPIT and the Philippine Insurers and Reinsurers Association, Inc. (PIRA) to discuss the former’s proposal.

According to the Insurance Commissioner, the PIRA has expressed “willingness to lower the premiums being collected from jeepney operators but subject to the compliance with the minimum tariff rates imposed by the IC.”

Currently, the basic rate for loss and damage on motor car insurance coverage is at 1.5% to 2.0% of the value of the motor vehicle, while the premium for act of nature coverage has a minimum rate of 0.50% of the value of the motor vehicle.

The Department of Transportation’s Jeepney Modernization Program aims to gradually phase out traditional jeepneys or jeepney fleets that are over 15 years old and replace them with environmentfriendly vehicles equipped with more efficient engines.

The modernization program of public utility vehicles is set to take place within the month. —