Question & AnswerQ&A (LTFRB MEMORANDUM CIRCULAR NO. 2001-001)
The main purpose of LTFRB Memorandum Circular No. 2001-001 is to amend Memorandum Circular No. 99-011 to improve the passenger accident insurance requirement for public utility vehicle (PUV) operators, including the creation of a two-group insurance system to minimize fake certificates, graft, corruption, ensure proper tax payments, and establish a computerized data bank.
The two group system requires all insurance companies wanting to participate in the passenger accident insurance program to join one of two authorized groups, with PUV operators' insurance divided between these groups based on the odd or even middle number of their LTO license plates, aiming to reduce graft, corruption, and fake certificates.
A group must have at least ten insurance companies licensed by the Insurance Commission, an aggregate paid-up capitalization of P500 million, computerized data compliance, payment of claims within seven days, issuance of a standardized certificate of cover, and submission of all reports and compliance requirements set by the Board.
PUVs with an even middle number in their LTO license plates must get insurance from the first group (PAMI), while those with an odd middle number must insure with the second group. This allocation is interchanged yearly for fairness. Exceptions apply to operators with fifty or more units or with Board-approved petitions.
An operator may choose any group if they have 50 or more operating units, or if they submit a verified petition to the Board justifying the preference, showing legal benefits without predatory pricing. No other exceptions are allowed without Board en banc approval.
Companies violating rules such as predatory pricing, failing to pay commissions properly, issuing unauthorized certificates, or late claims payment may be permanently banned from the program after notice and hearing, including their key officers and successors. Temporary cease and desist orders of up to 30 days can also be issued pending investigation.
Predatory pricing means selling or offering insurance at prices significantly below the industry average to unfairly attract customers and harm competitors.
All claims must be paid within seven (7) calendar days from the submission of all required documents, with the insurance company providing the LTFRB a list of those required documents.
By mandating that authorized insurance groups comply with computerized data requirements and monitoring, the program leverages private sector resources to create and maintain the data bank without government expense.