LTFRB MEMORANDUM CIRCULAR NO. 2004-004

Law Summary

A. Background

This memorandum circular addresses the amendments to the Passenger Personal Accident Insurance Program (PPAIP) due to the expiration of the accreditation of two insurance groups.
Two insurance groups, Philippine Accident Managers, Inc. (PAMI) and Philippine Accident Insurance Consortium 2 (PAIC2), had their accreditation expire on February 29, 2004.
The LTFRB invited proposals from all insurance companies in good standing in the Philippines to participate in the PPAIP.
The Insurance Monitoring and Review Committee (IMRC) was created to oversee the evaluation and accreditation processes.

Key Details: • Board Resolution No. 1 (January 15, 2004) prescribed the Terms of Reference (TOR) for the accreditation process. • Board Resolution No. 2 (January 27, 2004) reconstituted the IMRC to evaluate proposals. • Four proposals were submitted, but the Board declared a failure of the accreditation process on February 12, 2004, due to non-compliance. • Legal advice from the Office of the Solicitor General confirmed no legal impediments for a Free-for-All system as of March 3, 2004.

B. Implementing Guidelines

1. Two Management Groups

The PPAIP will adopt a "Two Management Group: Odd-Even System" with PAMI and Special Alliance Management, Inc. (SAMI).
Each group may rotate its lead company every six months to one year with prior notification and Board approval.

Key Details: • PAMI covers vehicles with EVEN middle numbers; SAMI covers ODD middle numbers. • System evaluation will occur before the end of each contract term.

2. Package Benefits

All public utility vehicles (PUVs) must secure "All Risk-No Fault" insurance with specified benefits.

Death Benefits: • Buses: P3,360,000 (up to 56 passengers) • Jitneys: P900,000 (up to 15 passengers) • AUVs/Vans: P540,000 (9 passengers) • Sedans: P300,000 (5 passengers)

Medical Benefits: • Buses: P700,000 (major injuries) • Jitneys: P187,500 • AUVs/Vans: P112,500 • Sedans: P62,500

Additional Benefits: • Accidental Death: P60,000 • Loss of limbs or sight: up to P60,000 • Maximum Bail Bond Assistance of P10,000 for litigation.

3. "All-Risk-No Fault" Policy

Covers various incidents regardless of driver condition or passenger status.

Key Coverage Details: • Includes unauthorized drivers and those under the influence of substances. • Coverage extends to non-paying passengers and during boarding/disembarking.

C. Key Conditionalities

Strict enforcement of conditions is required to protect the transport sector and public interest.

Key Conditionalities: • No predatory pricing or unauthorized commissions. • Claims must be paid within five working days. • Establishment of a Common Claims Fund of at least P10 million.

D. Penalties and Compliance

Accreditation for PAMI and SAMI can face sanctions for violations.

Consequences: • First offense: Fine • Second offense: Increased fine • Third offense: Potential termination of contract.

Key Takeaways

The LTFRB has revitalized the PPAIP to include participation from all insurance companies under a structured management system.
A clear benefits package has been established, providing extensive cover for various accident-related incidents.
Strict compliance and monitoring measures are in place to ensure fair practices and timely claims processing.
Penalties for non-compliance emphasize the importance of adherence to the guidelines set forth in this memorandum circular.