IC eyes lower premiums for jeepney operators

The Insurance Commission (IC) said yesterday it is considering a proposal by a transport group to implement measures, such as lowering premiums, to help jeepney operators cope with the government’s jeepney modernization program.

Commissioner Dennis Funa said the Kilusan sa Pagbabago ng Industriya ng Transportasyon (KAPIT) requested the IC to lower the premium charged by insurance companies for comprehensive motor vehicle insurance in an effort to reduce the upfront and recurring expenses of jeepney operators.

“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,” Funa said in a statement.

KAPIT has also asked the IC to allow insurance firms to extend loans to help jeepney operators, transport groups, cooperatives and transport management companies avail of new electric vehicles to comply with the modernization program.

“With this proposal, jeepney operators will have more options on where to source the funding for the acquisition of new vehicles,” Funa said.

Last month, the Department of Transportation launched the jeepney modernization program, which seeks to provide safe, comfortable and environmentally sustainable mode of public transport by phasing out old jeepneys.

The government is set to subsidize a certain portion of the cost for the acquisition of the new vehicles, while the Land Bank of the Philippines, Development Bank of the Philippines and the private sector can provide loans.

Citing estimates from KAPIT, Funa said the program will need about P66 billion annually for the next three years.

To properly evaluate their proposals, the IC said it asked the Philippine Insurers and Reinsurers Association Inc. (PIRA), the umbrella organization of all non-life insurance companies in the country, to submit their comments.

The IC is set to meet with KAPIT and PIRA to discuss the transport group’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 IC,” Funa said.

However, Funa clarified that insurance firms are bound to observe the minimum and maximum range of premiums for motor car insurance and cannot charge premiums below the rate imposed by the IC.

Currently, the basic rate for loss and damage insurance coverage is at 1.5 percent to two percent of the value of the vehicle while the premium for acts of nature coverage is subject to a minimum rate of 0.5 percent of the value of the vehicle.