Alex Magno
Philippine Star

Finally, some rationality will dawn in the way we get our vehicles registered and insured.

For years, one of the annual chores I endured was getting my vehicle registered. Each time, I tolerated what I always felt was a form of extortion: something called the Compulsory Third Party Liability (CTPL) insurance.

Normally, I buy my CTPL from whoever greets me at the LTO premises and offers to do the dreary task of stenciling my motor number onto the car registration renewal form. After doing that, they issue me some sort of insurance coverage and, as a value-added service, bring in my papers for processing.

I accept the insurance premium charges as some sort of payment for the services rendered — although constantly wondering why the registration and insurance process could not be integrated. After registering my vehicle, I go out and purchase a separate comprehensive insurance policy for some real protection.

Fortunately, I have never had any serious mishap on the road. Therefore, I never had an opportunity to test the reliability of either that CTPL policy or the comprehensive insurance cover.

That is truly fortunate. Now we know that from 2000 to 2007, 39.7 million vehicles were registered or re-registered with the LTO. However, only 17.1 million valid CTPLs are on record as having been validly issued. Which means that a far greater number, 22.6 million CTPLs were fake.

To put that another way, 22.6 million times, during that period, hapless motorists paid P900 or so for a worthless piece of paper representing no protection at all to the unwary consumer. That converts to several billion pesos lost to unscrupulous syndicates probably responsible for the intentional inefficiency of the process by which we get our vehicles insured.

In the classic study by Latin American economist Hernando de Soto, the Philippines was cited as a country with the most number of bureaucratic procedures and the longest processing time to get a new business properly registered. No wonder investment flows into our economy have been miniscule compared to our neighbors. No wonder we have failed to evolve an entrepreneurial culture as our neighbors have. No wonder many businesses operate underground and undocumented.

That economist might have fainted if he looked at how our citizens are made to endure Byzantine procedures for ordinary things like getting their driver’s license, registering their vehicles or accessing a wide range of public services. It might have been a nightmare computing the time and resources wasted on insane bureaucratic procedures and the billions of illicitly acquired wealth derived from exploiting inefficiencies in the system.

When the bright idea was finally broached that the insurance and vehicle registration process be integrated into the same information system that the LTO acquired, all of us should have cheered. But that was not the case. Those companies responsible for this shocking situation where over half of CTPLs issued were fake took the transport authorities to court and managed to hold back the integration process.

The vehicle insurance companies, many of them dubious, argued that integration would be harmful to their “industry” and cause the loss of jobs. What sort of “industry” has this been anyway? It is an “industry” that has defrauded consumers so systematically, concealed revenues due government and magnified the peril our traffic already poses.

Not only should the most dubious parts of this “industry” deserve to lose their jobs, they must be sent to jail. Senator Juan Ponce Enrile correctly described these issuers of fake CTPLs as “insurance buccaneers.” I would add to that by saying this is not an “industry”; it is a racket.

Reason finally dawned, after an inordinate amount of time, when the courts finally junked the suits filed by car insurers and cleared the way for the integration of the process with the GSIS providing the insurance cover. The GSIS, in turn, will process the insurance cover through properly accredited companies. This should result in a clean-up of the scores of fly-by-night insurers preying on hapless consumers.

The court decision is a triumph for consumer protection. It is, to be sure, a resounding defeat for the racketeers who stood in the way of making the vehicle registration process a more rational and efficient one.

Consumers of vehicle insurance cover will not only benefit from a more efficient registration process. They will also have the peace of mind that their insurance policy is legitimate and reliable. Too, the proper revenues due government will be duly paid.

But that is not all.

As a result of the integration of the CTPL system under the GSIS, vehicle owners will now be paying only about 60% of the existing premiums for the insurance cover. Private cars, for instance, will henceforth pay only P575 for the CTPL instead of the previous P900. The GSIS premium for CTPLs for public utility vehicles, including jeepneys, will now be only P575 instead of P950.

The lower premiums underscore another point: the insurance buccaneers have been charging unduly high premiums for CPTLs — more than half of the sold policies being fake. The unwary consumers who paid for fake insurance covers were duped twice over because they were charged on the basis of extremely high actuarial computations.

While the CTPL racket was on-going, billions have criminally been made by the insurance racketeers. Consumers of insurance covers paid dearly for worthless pieces of paper.

It is about time this mess was cleaned up. The GSIS deserves to be credited for stubbornly fighting the racketeers and getting this beneficial reform done.