A.  BACKGROUND:

Due to the expiration of the accreditation of the two (2) insurance groups, [Phil. Accident Managers, Inc. (PAMI) led by United Coconut Planters Bank Insurance, Inc. & Philippine Accident Insurance Consortium 2 (PAIC2) led by Great Domestic Insurance Company, Inc.] under Memorandum Circular No. 2001-010, dated 28 February 2001, the Board deemed it fit to invite all insurance companies in the Philippines, of good standing, to participate in the program by submitting their proposals.  Thus, Board Resolution No. 1, dated 15 January 2004, was issued to prescribe the Terms of Reference on the Accreditation Process of the Passenger Personal Insurance Program (PPAIP) for Public Land Transportation Services and created the Insurance Monitoring and Review Committee (IMRC).

Last 27 January 2004, Board Resolution No. 2, was issued to reconstitute the IMRC, implement the evaluation/accreditation process and submit its recommendation(s) to the Board for final disposition.

Initially, there were five (5) Insurance groups who availed of the above-mentioned Terms of Reference (TOR) and only four (4) groups: namely Philippine Accident Managers, Inc. (PAMI); Passenger Accident Insurance Consortium 2 (PAIC2); Transport Accident Consortium (TRAPIC) and Equal Sharing Group (ESG); submitted their proposals for evaluation by the IMRC.

Based on the Detailed Evaluation Procedures and Guidelines, the IMRC assessed the four (4) proposals and submitted its final evaluation report to the Board on 12 February 2004 for deliberation.  Consequently, during the joint Board-IMRC deliberation on the same date, the Board decided to declare a failure of the accreditation process due to the non-compliance by all the proponents to meet the basic requirements of the Terms of Reference (TOR);

Due to time constraints, the accreditation of PAMI and PAIC was extended twice, the recent one expired on 29 February 2004.

Relative to the case filed by "FEJODAP, et.al, vs. Land Transportation Franchising and Regulatory Board" (Civil Case No. Q-04-51633), the Office of the Solicitor General, last 03 March 2004, issued its official legal advice to wit: "LTFRB has no more legal impediment for the commencement of a Free-for-All system inasmuch as the accreditation of the Two-group Insurance Companies, namely:  the Philippine Accident Managers, Inc. (PAMI) and Passenger Accident Insurance Consortium 2 (PAIC2), has expired on 29 February 2004."

In a meeting held last 04 March 2004, the Board on one hand, the Commissioner of the Insurance Commission (IC) and the four (4) Insurance Group proponents on the other, all agreed to implement the following:

1) A "two-management group system" by the name of Philippine Accident Managers, Inc (PAMI) (composed of PAMI and PAIC2) and Special Alliance Management, Inc.  (SAMI) (composed of TRAPIC and Equal Sharing Group) was proposed to the Board as the official two (2) Insurance Management Groups to be accredited by the Board subject to accreditation/registration/license (not later than 12 March 2004) by the Insurance Commission, as provided under Section 299 of the Insurance Code of the Philippines.

2) While IC-accreditation is in progress, the LTFRB PPAIP shall be open to all insurance companies.  All certificates of cover issued by the insurance companies shall be subject to buy-out/buy-back by the two management groups immediately upon accreditation.

3) All LTFRB Regional Directors shall submit to the IMRC on 15 March 2004 the inventory/list of COCs presented by the PUV operators between 01 to 12 March 2004.

4) The insurance Commission shall invite all Insurance Companies to participate in the PPAIP and shall be responsible in determining the actual composition and equal distribution of the insurance companies joining the said two-management groups, including establishing guidelines in determining duties, responsibilities, obligations and appropriate risk-premium sharing schemes, in addition to that prescribed by the Board.

5) LTFRB shall maintain its function in terms of monitoring and evaluation.  A Multilateral Memorandum of Agreement (MOA) shall be signed among LTFRB, IC and the two managements groups (PAMI and SAMI) including lead companies once IC-accreditation and negotiations are finalized.  Said MOA shall be the basis for monitoring and evaluation.

6) LTFRB submitted the proposed Premiums and Benefits Package of the PPAIP to the IC for evaluation and approval prior to implementation. Approval of proposed insurance package shall be secured from IC not later than 10 March 2004.  (Last 04 March 2004, LTFRB received a fax letter from the Insurance Commission informing the Board of the approval of the Policy Form of subject Insurance Cover, pursuant to Section 226 of the Insurance Code of the Philippines.)

7) Insurance companies and other parties concerned shall not file any case, be it civil, criminal, administrative, or otherwise, against LTFRB or any of its officials and personnel relative to PPAIP.

B.  IMPLEMENTING GUIDELINES

1. Two Management Group: Odd-Even System".

The LTFRB revitalized Passenger Personal Accident Insurance Program (PPAIP) shall adopt the "Two Management Group: Odd-Even System" composed of the Passenger Accident Managers Inc.  (PAMI) led by UCPB General Insurance Co. Inc and the Special Alliance Management Inc. (SAMI) led by Stronghold Insurance Co. Inc..  However, each management group has the option to rotate its lead company within a minimum period of six (6) months and a maximum of one (1) year with 15 days prior notice given to the Board before its effectivity and shall be subject to Board approval.

The middle number of the LTO issued plate numbers shall determine the odd-even scheme assignment.  The LTFRB confirmation MUST be secured PRIOR to LTO registration.  The details are as follows:

1. All covered PUV(s) with LTO license plates having an EVEN Middle Number shall be assigned to the PAMI.
   
2. All covered PUV(s) with LTO license plates having an ODD Middle Number shall be assigned to the SAMI.
   
3. The Odd-Even Scheme may be interchanged in the middle of the contract term, first half being from 15 March 2004 to 15 September 2005 and the second half being 16 September 2005 to 15 March 2007 subject to the evaluation and approval of the Board in order to ensure equitable and fair distribution of clients.

2.  Package Benefits

All public utility vehicles, such as those listed below, are hereby required to secure an "All Risk-No Fault" passenger personal accident insurance with the following covered benefits:

2.1    Death Benefits.

 

	No. of Pax	Death Benefits
	(incl. Driver)
Buses/Mini Buses	all (actual cap not to exceed 56	P 3,360,000.00
Jitneys	all (actual cap. not to n exceed 15)	900,000.00
AUV's/ Vans	all (9)	540,000.00
Sedan	all (5)	300,000.00
Trucks-For-Hire	all (3)	180,000.00

2.2    Medical Benefits
     

	No. of Pax*	Maximum Medical Benefits
	(incl. Driver)	(Major Injuries with receipts)
Buses/Mini Buses	all (actual cap. not to exceed 56)	P 700,000.00
Jitneys	all (actual cap. not to exceed 15)	187,500.00
AUV's/ Vans	all (9)	112,500.00
Sedan	all (5)	62,500.00
Trucks-For-Hire	all (3)	37,500.00
* pax- Passenger

Automatic Medical Benefits for injuries shall be P 500.00 without Official Receipt.

2.3    Benefits and Remuneration. The insurance remuneration for each covered passenger is as follows:

 

Benefits	Maximum Amount per Passenger
a. Accidental Death	P 60,000.00
b. Loss of two or more limbs	P 60,000.00
c. Total and irrecoverable loss of sight in both eyes	P 60,000.00
d. Dismemberment in one limb	P 30,000.00
e. Total and irrecoverable loss of sight in one eye	P 30,000.00
f. Loss of arm, at or above elbow	42,000.00
g. Loss of both hands or all fingers and both thumbs	60,000.00
h. Loss of arm between elbow and wrist	30,000.00
i. Loss of hand	25,500.00
j. Loss of 4 fingers	25,500.00
k. Loss of 1 thumb	18,000.00
l. Loss of index finger	9,000.00
m. Loss of middle finger	6,000.00
n. Loss of ring finger	3,000.00
o. Loss of little finger	3,000.00
p. Loss of metacarpals	2,400.00
1st or 2nd (addl.)	1,800,00
3rd,4th and 5th	1,200.00
q. Loss of leg above the knee	36,000.00
r. Loss of leg below the knee	30,000.00
s. Loss of one foot	30,000.00
t. Loss of big toe	3,000.00
u. Loss of all toes in one foot	9,000.00
v. Loss of any toe other than big toe	600.00
w. Loss of hearing- both ears	30,000.00
x. Loss of one ear	4,200.00

2.4  Bail Bonds. In case of litigations filed against the driver of said LTFRB authorized PUV, a maximum Bail Bond Assistance of P 10,000.00 shall be shouldered by PAMI and/or SAMI and paid directly to the Court or to the Bonding Company, on cases arising from accidents covered by the PPAIP.

2.5  The Management Group shall give a free compulsory defensive driving seminar to drivers.

3.  The "All-Risk-No Fault" policy shall be adopted, including, but not limited to the following:  

 

3.1.	Covered despite the condition of the driver at the time of the accident, whether:
	a) driver is unauthorized;
	b) driver is under the influence of liquor;
	c) driver is under the influence of legal or prohibited drugs; or
3.2	Covered despite violations of designated route, ex. out-of-line.
3.3	Covered even during the incidence of unprovoked homicide, murder and/or assault, including holdup and kidnap incidents.
3.4	Covered even non-paying passengers such as, but not limited, to drivers, conductors, vendors, beggars and the like.
3.5	Covered even persons/passengers while boarding and disembarking the insured vehicle or immediately thereafter.
3.6	Covered despite change of ownership of the vehicle; provided that the vehicle shall retain its status as "LTFRB-authorized" Public Utility Vehicle.
3.7	Covered until its expiry date unless reverted to "Private" status.
3.8	Covered without Automatic Termination Clause.
3.9	Covered despite Terrorist Attacks.

4.  Key Conditionalities. To address the concerns of the transport sector and the commuting public, the following conditions shall be strictly enforced:

 

4.1	PAMI and SAMI, their agents and employees shall not resort to predatory pricing of insurance premiums which are markedly unresponsive to the subscribed benefits.
4.2	No commissions, rebates and/or discounts shall be allowed.
4.3	LTFRB shall only recognize those authorized branch offices and their duly authorized and certified representatives. PAMI and SAMI shall submit a list of its authorized branch managers and key personnel with their specimen signatures and official addresses. Only said personnel shall be recognized by LTFRB as the duly authorized representatives of PAMI and SAMI to issue, distribute, market or release the required insurance policy/certificate of cover (COC).
4.4	Payment of all claims shall be made within five (5) working days from occurrence of validated incident and/or accident under an "All Risk-No Fault" Insurance Policy.
4.5	Issuance of a COC with security markings and the standard form and contents duly approved by LTFRB and concurred by the Insurance Commission. A distinctive regional alphanumeric series of Certificates of Cover shall be solely assigned for this program.
4.6	PAMI and SAMI, separately, shall establish and maintain a Common Claims Fund, which shall not be less than PhP 10 Million at any given time.
4.7	A distinct and separate Book of Accounts shall be maintained by PAMI and SAMI as the bases in reckoning tax payments due to the government and financial performance. .
4.8	All insurance policies and COCs issued by PAIC2, PAMI and other insurance companies (during free for all period) between 01 March and 14 March 2004 shall be subject to buy-out/buy-back by either PAMI or SAMI depending on the plate middle number.
4.9	All insurance policies and COCs issued by PAIC2 and PAMI between 28 February 2003 and 29 February 2004 shall remain effective until its expiration.
4.10	PAMI and SAMI must establish a nationwide computer database of all covered PUVs accessible to everyone on real time via the LTFRB website. The Management Groups shall establish a single point of contact and/or a hotline number 24 hours a day, 7 days a week. PAMI and SAMI shall set up the passenger accident monitoring link of the LTFRB website within the first three months of operations.
4.11	PAMI and SAMI must establish a PUV Accident Monitoring System to assist in the accident rescue operations of local Emergency Medical Services (EMS) on site and proactively assist in the preparation of claim documents.
4.12	In case of violations, the accreditation of PAMI and SAMI shall be subject to the sanctions imposed by the Board after full investigation. The Board, for public interest, may issue a Cease and Desist Order. Sanctions are the followin

	a) First Offense	Fine
	b) Second Offense	Fine
	c) Third and Final Offense	Fine/Termination of Contract
	(The Board shall determine the amount.)

All issuances, circulars and orders inconsistent with the foregoing circular are hereby deemed amended, revised or revoked.

This memorandum circular shall take effect immediately.

SO ORDERED:

Adopted: 15 March 2004

 

(SGD.) MARIA ELENA H. BAUTISTA
Chairperson
(SGD.) FELIX S. RACADIO	(SGD.) REMEDIOS G. BELLEZA
Board Member	Board Member