Millions of Motorcycle Taxi and EV Owners at Risk: Insurers Sound the Alarm and Plan to Intervene

THE Philippine Insurers and Reinsurers Association (PIRA) has revealed that the local non-life insurance industry is exploring the possibility of setting guide rates for coverage of motorcycle taxis and electric vehicles (EVs) due to the alarming losses incurred by insurance companies that offer these products.

According to PIRA Executive Director Michael L. Rellosa, the existing rates being offered by some insurance companies are not reflective of the actual risks involved, resulting in significant losses for these insurers. This has prompted the industry to take a closer look at the current pricing scheme and consider implementing guide rates that would help level the playing field.

The move comes as no surprise, given the rapidly growing number of motorcycle taxis and EVs on the country's roads. With this growth comes an increased demand for specialized insurance coverage that addresses the unique risks associated with these types of vehicles. However, the current lack of standardization in pricing has led to a pricing war among insurance companies, resulting in some offering extremely low rates that are not sustainable in the long run.

Rellosa emphasized that the goal of implementing guide rates is not to stifle competition, but rather to ensure that insurance companies are able to offer coverage at prices that accurately reflect the risks involved. This would not only benefit the insurance companies but also the policyholders themselves, as it would help to prevent companies from going out of business due to unsustainable losses.

Once the guide rates are implemented, insurance companies would be required to offer coverage at prices that fall within a certain range, allowing for some flexibility to accommodate different risk profiles. This would provide a level of standardization across the industry, making it more difficult for companies to undercut each other in a bid to secure market share.

The implementation of guide rates is expected to have a significant impact on the local insurance market, particularly for motorcycle taxi and EV owners. While some may view this as an added expense, industry experts argue that the benefits of having a stable and sustainable insurance industry far outweigh the costs. After all, policyholders can rest assured that their insurance coverage is solid and will be there when they need it most.

As the insurance industry continues to evolve in response to changing market conditions, one thing remains clear: the importance of a robust and sustainable insurance industry in protecting the public. By taking proactive steps to address the challenges posed by unsustainable pricing, the industry is working towards a brighter future for all stakeholders involved.