GSIS Monopoly
The Filipino-based Government Service Insurance System (GSIS) is responsible for insuring state assets in that country. They have a monopoly on that market, because according to the Republic Act 656 of 19 51, they must “secure some P1.5 trillion of the state’s assets” (BusinessWorld). They have recently been accused of abusing this market power by overcharging these government agencies large premiums, while fattening the commissions that they pay to their “favored brokers” (BusinessWorld). This has come to the attention of the public because National Power Corporation (Napocor) has been complaining that GSIS had sold the company an insurance contract that they felt was unjustifiably high. These high premiums would be used to wine and dine brokers and pay out huge commissions. The most prominent of these brokers being Jardine Lloyd Thompson Insurance Brokers, Inc. They have long been the number one insurance company in the Philippines, up until 2000, when according to Bus!inessWorld; they were overtaken by Orient Pearl, which had only been in business since 1999. GSIS is a monopoly, and I believe that it needs to be regulated so as to stop it from continuing to jack up the prices only skim large commissions out o
The GSIS estimates it currently insures P1.5 trillion worth of state assets. To limit potential losses from such a big exposure, it passes on much of the risks to private insurance companies that then “reinsure” what the GSIS had not covered. The GSIS employs the services of brokers that negotiate with private reinsurers
Some topics in this essay:
Pascual Jr,
John Palatiello,
Reinsurance Monopoly,
Orient Pearl,
Republic Act,
Sheila Samonte-Pesayco,
Corporation Napocor,
Brokers Inc,
System GSIS,
natural monopoly,
market power,
regulate pricing,
republic act 656,
republic act,
profit regulation,
act 656,
assets limit,
“favored brokers”,
economies scale,
benefit government,
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Approximate Word count = 1902
Approximate Pages = 8 (250 words per page double spaced)
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