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The insurance for passengers of Public Utility Vehicles (PUV) started in 1990 when various accidents happened and difficulty in payment of hospitalization claim and death benefits for passengers. A circular was issued by the LTFRB, headed by Chairman Dante M. Lantin mandating all Public Utility Vehicles to secure a personal accident insurance for all its passengers, in answer to Presidential Decree 1460, otherwise known as the Insurance Code of the Philippines, provides: ”It shall be unlawful for any land transportation operator or owner of a motor vehicle to operate the same in the public highways unless there is a force in relation thereto a policy insurance or guaranty in cash or surety bond issued in accordance with the provisions of this charter to indemnify the death or bodily injury of a third-party or passenger, as the case may be, arising from the use thereof.” (section 374, PD1460)

In March 1992, Department Order No. 92-587 had taken its position that all PUVs must have sufficient insurance coverage to protect the riding public before a franchise can be issued to any operator.


In 1990, Chairman Lantin asked the Insurance Commission through Commissioner Eduardo Malinis to get the insurance companies to cover all PUVs throughout the country for the amount of Ps. 50,000.00 per passenger.

After several consultations with the Philippine Insurance Rating Association (PIRA), the premium per bus was pegged at Ps. 15,000.00 for the period of one (1) year on a standard personal accident insurance coverage, 10,000 for the jeepney. This was arrived due to the very high risk of accidents on all public utility vehicles and for an insurance company to cover it would be unprofitable. After a dissemination campaign was launch with the public transport group, the idea was rejected by the transport industry due to a very expensive premium.

In 1994-1995, Chairman Lantin with Commissioner Malinis discussed once again with the officers of PIRA but still premium was maintained at a high level due to a number of accidents. Which happened during the previous years. All this time, the transport operators needed this coverage but found the premium too expensive i. e. Ps. 15,000.00-bus; Ps. 8,000.00- jeepneys and taxis.

In November 1998, a bus in Baguio met an accident. Twenty-two (22) people died and several were injured. Insurance coverage was only Ps. 50,000.00 for LTO-CTPL and was equally divided to the passengers. Each dead passenger’s family received Ps. 2,780.00. There were complaints and a public outcry due to the very low claim settlement.

December of the same year, Chairman Lantin again requested Commissioner Malinis if Department Order 92-587 can be implemented with a reduced in premium that will make it affordable to all PUV operators.

From January to July 1999, ten (10) insurance companies made a study on how to come up with the coverage. The LTFRB requested a “NO FAULT “ policy. PIRA (Phil. Insurance Rating Assoc.) was assigned to make an actuarial report on this. PIRA results showed that no insurance company giving cover alone would be able to stand the losses. This time premium was made into socialized premium was already lowered to Ps. 1,000.00-buses; Ps. 900-taxis; Ps. 800.00-jeeps. This SOCIALIZED premium was arrived based on the principle that they get the total volume of PUVs. If all revenues are put in one (1) basket then claims can be paid through out the year.


Upon various consultation, a circular mandating all public utility operators are required to secured a comprehensive passenger personal accident insurance (PPAI) was created last June 1999. But because of fear from the transport groups that this is again will be like the CTPL of LTO wherein in proliferation of fake policies/Certificate of Cover (COC) is very rampant; unjustified commissioning is made; graft and corruption is very present; and worst unpaid claims is also very high, and taxes are not remitted by insurance companies, on last quarter of 2000, big transport leaders from FEJODAP, PISTON, PCDO-ACTO, FERCODA, MJODA, PBOA, IMBOA and ATOM join together in calling and petitioned to the LTFRB and the government that the PPAI program should be made on a two-group system and demanded that their proposal should be followed, because they are the one’s who pays the premium; they (operators/drivers) are the one’s who are victimized by these scrupulous insurance agents so it is just right that there proposal be heard.

Upon consultation and various public hearing with the Insurance Commission present and a meeting were held from various regions on this proposal, LTFRB issued the Memorandum Circular 2001-001 on February 01, 2001 and 2001-010 declaring the two-group system will take effect on March 01, 2001 and stating PAMI/UCPB General Insurance and PAIC2/Great Domestic Insurance are the LEAD insurance companies.