Insurance companies (non-life) have sued the Land Transportation Office (LTO) for circulating Memoradum 2015-1975, which deemed them as an “insurance cartel” to the public.
The insurance companies have sought a temporary restraining order against the LTO for circulating the article entitled “Reformed Compulsory Third Party Liability Insurance.”
The mandatory insurance coverage under Batas Pambansa 73, covers all types of vehicles.
Under the ‘revised version,’ a pool of insurers will be formed – instead of the normal ‘open market’ system presently in place.
The Memorandum noted that a national administrator will oversee the pool of insurers.
Insurance companies throughout the Philippines say that doing so, the LTO is in affect forming a ‘cartel.’
Philippine Insurers and Reinsurers Association chairman Michael Rellosa said the insurance companies have voted overwhelmingly to take all possible legal measures to oppose the circular.
“Our members recognize that the LTO does not have the legal right to regulate insurance business in any way since such power and responsibility reside only in the Insurance Commission under the revised Insurance Code,” Rellosa said.
The insurers further argued the circular simply establishes a monopoly thus destroying the essence of a free market.
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