Compulsory TPL insurance started with President Ferdinand Marcos' Letter of Instruction 191 which created the Philippine Motor Vehicle Liability Pool. This made compulsory TPL vehicle insurance for all vehicles - a consortium of private insurance companies together with the Government Service Insurance System (GSIS). The consortium, managed by representatives of the insurance industry, eventually collapsed because of various fraudulent practices coming from the side of member companies as well as the management group.

Thus, PD Nos. 1455 and 1814 were issued. The CTPL was transferred to the GSIS for government vehicles, and to the private insurance companies for private vehicles.

From that time to the present, the GSIS has properly and efficiently done its job of covering all government vehicles.

CTPL coverage for the private sector, however, was not handled as well or as efficiently. Private sector coverage suffered from the problem of fake insurance policies and fake certificates of cover and the practice of unauthorized franchising. These illegal practices prejudiced the insuring public with premiums being absconded, taxes due government not remitted and the non-payment of claims that should have been paid to motor vehicle accident victims.

Not only that, the premiums paid by private vehicle owners were also much higher than the premiums for the policies issued by the GSIS.

In 2002, in response to the growing concern over the proliferation of fake policies and certificates of cover (COCs), the LTO agreed to implement the private insurance companies sponsored COC Authentication System (COCAS), requiring the authentication of COCs through D-Tech, a company chosen by the private insurance industry instead of STRADCOM, the IT contractor of LTO.

The COCAS, however, still failed to solve the problem. The fakes were still there, premiums were still absconded, taxes were unremitted to government, and claims of the registering/ insuring public remain unpaid.

In 2005, upon invitation by DOTC/LTO-STRADCOM/DOF, GSIS, PIRA and RAMSI submitted to the DOTC-LTO-STRADCOM Interconnectivity Committee proposals to address the recurring fraudulent practices related to the CTPL in private insurance industry circles.

GSIS proposed integration of the CTPL insurance in the vehicle registration process.

In 2006, a CTPL committee formed by DOF-DOTC with the IC and DOTC Undersecretary for land transportation as co-chair, with the heads of LTO, LTFRB and DOF as members, invited interested parties to submit solutions to the CTPL problem.

Among the submitted proposals were IC/PIRA proposal for the creation of a clearing house and the collection/sale of CTPL insurance through selected banks. Private companies were made to contribute P200,000 thousand each.

GSIS reiterated its 2005 proposal to integrate insurance and registration at the LTO System.

In July 2007, DOTC issued a Department Order for the integration of insurance and registration using the LTO System after the Department of Justice issued separate opinions stating that DOTC LTO had the legal mandate to implement the program and that GSIS had legal mandate as well to underwrite the CTPL insurance even for private vehicles. This was opposed by the private insurance industry through a court case filed by PIRA.

Also in July 2007, due to the expiration of the MOA of D-Tech for the authentication of COCs, the DOTC-LTO implemented an interim system for issued CTPL insurance policies using STRADCOM's on-line authentication system linked to the LTO database. In January 2008, PIRA passed a resolution advising its members that they find nothing objectionable to the proposal of some members to pass on the cost of the interconnectivity fee, that is being charged by STRADCOM, in the verification of COCs to their clients-assureds in the amount of P50.40 inclusive of 12 percent VAT per COC, although PIRA in a prior transport summit meeting of DOTC-LTO-LTFRB-Transport sector committed to absorb the P50.40 IT fee.

In the meantime, LTFRB reported to LTO that the interim verification system led to another private insurance industry anomalous practice among some private insurers of misdeclaring vehicles types and issuing inappropriate policies. You might have thought that you were insuring against TPL your four-door sedan when the issued policy actually covered a tricycle.

On June 30, 2008 the LTO sent a memorandum to DOTC that with the Insurance Commission's (IC) adoption of the GSIS proposal to integrate insurance and registration at the LTO registration process thru its IT database. With the IC's concurrence, a memorandum of agreement to implement the GSIS solution was signed. The PIRA injunction against the adoption of the GSIS solution was dismissed by RTC Makati Branch 45 on June 23, 2008,

On July 1, 2008 MOA was signed by DOTC-LTO-IC-GSIS and STRADCOM to implement a permanent solution to more than three (3) decades old problem of CTPL insurance via integration of insurance and registration at LTO registration process.

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Vehicle owners will surely welcome the implementation of the GSIS CTPL scheme because it saves them money and ensures that their CTPLs are genuine.

A private vehicle owner will now only pay P575 for the GSIS CTPL compared to the P900 charged by present CTPL providers, for a saving of P325 per policy. The GSIS CTPL for utility vehicles, including jeepneys, will also cost only P575 compared to its old price of P950, for a saving of P375.

Light truck owners, on the other hand, will pay P355 less with the GSIS CTPL for that vehicle category costing only P625 per policy, compared to its erstwhile P980 price. Motorcycle owners will save P85 per GSIS CTPL policy costing P265 as against the old CTPL cost of P350.

While the GSIS will oversee the new CTPL system, it will farm out the actual provision of CTPL policies to creditable reinsurers, thereby rendering without basis claims that the GSIS will monopolize the CTPL business.

The purchase of GSIS CTPLs by motorists will be automatic and included in the registration process of the LTO. This is not so in the present system under which motorists have to buy first CTPLs with private dealers before transacting with the LTO. Just how serious was this problem? From 2000 to 2007, 39.7 million vehicles were registered with the LTO, but only 17.1 million valid CTPLs were on record to have been issued for the period. The 22.6 million difference is the number of fake CTPLs sold in the seven-year period. Two out of three buyers of CTPLs bought worthless insurance coverage.

Meanwhile, estimates put the losses of the government from the CTPL racket at P2 billion for the period.

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Point of clarification: CTPL covers injuries to a third party. In insurance parlance, the insurer is the first party and you, the insured, are the second party. Thus, those who are covered are people injured in accidents - both your vehicle's passengers and the other vehicle's passengers. Pedestrians are also third party.