IC increases benefit claim limits for third-party vehicle liability insurance
THE INSURANCE COMMISSION (IC) has raised the caps on benefits that may be claimed by third parties under the compulsory motor vehicle liability insurance (CMVLI), it said on Tuesday, even as there will be no increase in premiums.
The IC, through Insurance Memorandum Circular 2024-01, has doubled the limit for third-party liability that can be claimed under CMVLI to P200,000 from P100,000, it said in a statement.
The caps for death indemnity and burial and funeral expense indemnity were also increased to P200,000 from P70,000 and P30,000, respectively.
No-fault indemnity was also doubled to P30,000 from P15,000 for claims of death or bodily injury sustained by a passenger without the need to prove fault or negligence.
Insurers will also cover a maximum of P10,000 in claims for other incidental expenses not provided under the indemnities for bodily injury or death.
The new circular does not prescribe an increase in premiums to be paid for CMVLI, with the rates set in 2006 to remain in effect, the regulator said.
However, “premium adjustments arising from the above-mentioned increase in indemnities shall be subject to further study,” the IC said.
“The CMVLI policy is a requirement under the law for the registration of a motor vehicle. The purpose of this insurance is to ensure that the owners or operators of motor vehicles can indemnify third parties or passengers for accidents resulting in death or bodily injury,” the regulator added.
Philippine Insurers and Reinsurers Association, Inc. Executive Director Michael F. Rellosa earlier said the IC was able to raise the benefit claim caps for CMVLI without increasing premium rates as the business remains profitable for insurers.
The higher benefit limits were also implemented to account for the increased cost of treatment and medical care, he said in an e-mail.
“Over the years, we noticed that the losses haven’t been that bad and that line of business remains profitable, and we wanted to give something back. It shouldn’t affect nonlife insurance companies’ performances… It shaves off the profitability a bit, but based on the studies, we can handle it,” Mr. Rellosa said.
“Obviously, profit margins will thin, but computations show that there is a bit of room to wiggle still. Any more increases may have to come with an increase in premiums,” he added,
The nonlife insurance sector’s total net premiums written rose by 15.56% to P48.21 billion in the nine months ended September 2023, data from the IC’s website showed. Its net income grew by 14.99% to P5.48 billion in the period. — A.M.C. Sy
