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Asian
Spirit, the carrier of businessman/banker Alfredo Yao,
is flying amid questions about its insurance cover.
A source
at Prudential Guarantee and Assurance Inc. confirmed
that it is no longer the airline’s insurer as of June
18.
A check
with the Civil Aeronautics Board (CAB) shows, however,
that Asian Spirit has not submitted any new filing to
show any change in its insurance company.
An
official of Prudential Guarantee said Asian Spirit has
“no insurance at the moment…. Asian Spirit has rescinded
the policy of Prudential by declaring that it is no
longer their authorized insurance company.” The official
who requested anonymity said an airline insurance policy
usually is contracted annually, “so they [Asian Spirit],
pre-terminated their insurance [with Prudential].”
The
official made this statement in reference to a letter
written by Asian Spirit chief finance officer Albert S.
Toribio entitled “Appointment-Sole & Exclusive Broker on
Record” on June 18, a copy of which was obtained by
BusinessMirror, designating “Empire Insurance Co. Inc.,
as the exclusive insurance company of Asian Spirit for
its Aviation, Hull & Liability, Deductible, War,
Personal Accident and other aviation-related insurance
requirements.”
Toribio
added: “We also confirm our understanding that Empire
Insurance Company Inc. has appointed Asian Reinsurance
Brokers Pte. Ltd. as Empire Insurance Company Inc.’s
exclusive Reinsurance Broker in London for Asian Spirit
aviation insurance requirements.
“This
appointment of Empire Insurance Company Inc. and Asia
Reinsurance Brokers Pte. Ltd. rescinds all previous
appointments until cancelled in writing.”
Following the letter of appointment of Toribio,
Prudential Guarantee wrote Toribio on June 19, a copy of
which was obtained by BusinessMirror, saying: “By your
unilateral action of appointing another insurance
company from the 18th of June 2008, you have in fact
rescinded your insurance contract with Prudential
Guarantee and Assurance Inc. and therefore there is no
insurance policy in effect from the date of issuance of
your letter.”
Prudential Guarantee said it would be disclosing the
matter of the cancelled insurance policy of Asian Spirit
to “all institutions having a financial interest under
the Prudential Guarantee and Assurance Inc. insurance
policy for them to take the necessary action for their
interest.”
In a
phone interview with Porvenir Porciuncula, deputy
director of the CAB, he said he was not aware that Asian
Spirit has already appointed Empire Insurance as its
insurer, and that Prudential Guarantee has cancelled its
insurance contract with the carrier. “They [Asian
Spirit] have to give us a copy of the insurance policy
[with Empire Insurance].”
He added
that CAB can ground an airline’s planes if found to be
flying without insurance cover.
Despite
the cancellation of Prudential Guarantee’s insurance
policy, Asian Spirit planes were still flying as of June
19.
In a
phone interview yesterday, Toribio said Prudential
Guarantee is still the carrier’s insurance company.
“Right now our existing policy is with Prudential. We
have not received any notice of cancellation from them.
We are supposed to be given a 30-day notice if they
would cancel it.”
Asked
about the letter he wrote appointing Empire Insurance as
its new insurer, and Asian Reinsurance as its broker,
which forced Prudential to acknowledge the rescision in
its insurance policy, Toribio said: “I think that was
taken out of context.”
But he
said he was assured by AIG London “that our reinsurance
is still in effect.”
For his
part, Butch Rodriguez, vice president for commercial
affairs for Asian Spirit, said as far as he knows, the
carrier is still covered by Prudential Guarantee. “I am
not aware of any changes.” He added that it is his
office, which submits reportorial requirements to the
CAB, including insurance contracts. “I haven’t submitted
any new insurance contract to CAB.”
Asked
about the safety to passengers of flying on an airline
without insurance coverage, Rodriguez said: “Hindi
pwedeng walang insurance. If Prudential is no longer
covering us, I’m sure the management already has a new
one.”
At the
CAB’s Air Carrier Accounts and Field Office Division, a
source confirmed that Prudential Guarantee is still the
insurance on record of Asian Spirit. “Its contract is
for one year, from February 2007 to February 2008….
There is no other department [in CAB] where they can
submit an insurance contract except to us.”
Asked
about the contract’s expiration, the CAB has not asked
for any new insurance contract, the source said: “They
are expected to submit a new contract covering their
planes along with other reports by June 30, the deadline
for reportorial requirements.”
Asked
about the dangers for an airline to fly without
insurance, the source said: “They can take the risk, but
we are concerned with third party [liability], kung
mabangga sila [if they meet an accident].”
Meanwhile, the official at Prudential Guarantee said,
Asian Spirit “until today [Friday], has not officially
informed us” that the company was no longer the
carrier’s insurer. “Without telling us, they [Asian
Spirit] were trying to maintain us as their insurer
without telling us that they were getting another
insurer. That is in bad faith. When contracting an
insurer, you presuppose there is good faith between both
parties [client and insurer]. Asian Spirit’s failure to
tell us that they were getting another insurer,
dissolves any good faith.”
The
insurance official added, “under the law, all common
carriers have to exercise extraordinary diligence…they
have to have adequate insurance cover. By deciding to
remove Prudential Guarantee, they didn’t exercise that.”
Empire
Insurance, owned by the heirs of Don Roman Santos, is
one of 94 non-life insurance companies in the
Philippines, and sources in the firm confirmed that
aviation insurance is “not a product offered [by the
firm], although you can probably negotiate for it.”
For his
part, Insurance Commissioner Eduardo Malinis said a
non-life insurance company “can undewrite aviation
insurance policies” even if it has no previous track
record in doing so, “because they are allowed by their
license.” He added that a company like Empire Insurance
does not have to officially inform the IC that it is
going to offer aviation insurance.
“They
can offer it as long as the contract is not huge. But if
the policy is a huge amount, they need to get
reinsurance,” Malinis said. |
