News eDaily02 Aug 2017

Philippines:Regulator studies premium cuts for jeepney operators

02 Aug 2017

The insurance regulator is looking at a proposal to reduce insurance premiums collected from jeepney operators as part of the jeepney modernisation programme.

Insurance Commissioner Dennis B Funa said last month in a statement that the transport group Kilusan sa Pagbabago ng Industriya ng Transportasyon (Kapit) was seeking a reduction in upfront and recurring costs being shouldered by jeepney operators, in particular premium charged by insurance firms for comprehensive motor vehicle insurance.

“The Insurance Commission was informed by Kapit that it had spoken with several insurance companies which expressed their willingness to explore ways to make motor insurance products more affordable,” Mr Funa said. Also, he said Kapit “proposed that insurance companies be allowed to extend loans to jeepney operators, transport groups, cooperatives and transport management companies, and for the said loans to be considered as admitted asset of the lender-insurance provider”.

Citing Kapit figures, Mr Funa said the jeepney modernisation programme would entail PHP66 billion (US$1.3 million) yearly in the next three years. “In order for jeepney operators to avail themselves 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,” Mr Funa explained.

The Insurance Commission has requested the Philippine Insurers and Reinsurers Association, to submit their feedback on Kapit’s proposal.

Mr Funa said that PIRA has expressed its willingness to lower the premiums being collected from jeepney operators but subject to compliance with the minimum tariff rates imposed by the Insurance Commission.

At present, the basic rate for loss and damage insurance coverage is 1.5-2.0% of the value of the motor vehicle, while the premium for acts of nature coverage is subject to a minimum rate.

 

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