IC mulls lower jeepney insurance
The Insurance Commission (IC) said it is considering the lowering of premium on comprehensive motor insurance and extend loans to jeepney operators to contribute to the government’s plan to modernize more than 200,000 public utility vehicles (PUVs) or jeepneys, the main mode of public transportation in the country.
Insurance Commissioner Dennis B. Funa said they are studying the proposal of a transport group to reduce the upfront and recurring cost charged by insurance firms for the comprehensive motor vehicle insurance to jeepney operators.
“The IC was informed by KAPIT [Kilusan sa Pagbabago ng Industriya ng Transportasyon] 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 in a statement.
In addition, KAPIT likewise proposed that insurance firms be allowed to extend loans to jeepney operators, transport groups, cooperatives, and transport management companies and for the loans to be considered as “admitted asset” of the lender-insurance provider.
“Based on the letter of KAPIT, the jeepney modernization program will need R66 billion a year for the next three years. Hence, their proposal to the insurance industry will help reduce the costs of this program on the part of jeepney operators,” Funa said.
In order to assist KAPIT and properly evaluate the group’s proposal, the IC requested non-life insurance companies to submit their comments to the KAPIT proposals.
“Based on the initial comments, they 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,” Funa said.
He, however, clarified that 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 IC, the official said.
At present, the basic rate for Loss and Damage insurance coverage is at 1.5 percent to 2.0 percent of the value of the motor vehicle, while the premium for acts of nature coverage is subject to a minimum rate of 0.50 percent of the value of the motor vehicle.