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Something stinks in GSIS insurance treaty overprice

No doubt insurance makes a great business.
According to sources, “enterprising” officials of the pension agency for government workers with the guidance of Palace officials have hatched a scheme to rake in a few million pesos in the purchase of an insurance treaty from a reputable international insurance or reinsurance provider, albeit a practice meant to safeguard and earn from the insurance treaty revenues for the country and pensioners.
Before 2016 came to a close, sources bared Government Service Insurance System tendered its 2017 insurance treaty requirements to the market with a P375 million authorized budget cap (ABC). However, here’s the rub: sources insist that global markets and analysts priced and valued the treaty needed by GSIS at some P350 million only.
That’s a P25 million excess over the true worth of the services needed. So, who benefitted from this alleged overprice?
No GSIS top official has come forward to explain the P25 million overprice. Not one offered a clue where the P25 million went or who gained from the overpricing. Not even then GSIS chairman now Health Secretary Francisco Duque who presided over the affairs of the agency since his appointment last March together with his chosen OIC/president, Nora Saludares, has.
This scheme has been one of the easiest sources of huge commissions for certain GSIS officials and their partners in the scheme (which had been ongoing under various administrations). A close look at the records over the years would show who were/are these favored partners in the scheme.
Unfortunately, this “practice” reportedly persists to this day which is rather regrettable, for GSIS members — especially public school teachers who constitute the bulk of the pension agency’s membership — and the government the old syndicate members (insiders , their favored insurers and their godfathers in the DoF and Malacañang) continue to lord over the entire process.
By giving out inadequate if not thoroughly false, misleading or even garbage information to possible bidders, this syndicate has set into motion the laundering of commissions thru adjustment payments, i.e., the “favored” insurer(s) will have the chance to collect additional fees since they can claim that the data and related items contained in the Terms and Conditions of the bid were inaccurate, inadequate, misplaced, etc.
Last November 29, despite unanswered queries about its flawed bidding data and rules, GSIS bid out the 2018 insurance treaty.
And according to the source, there was again the usual excessive pricing. As the 2018 authorized budget cap is P450 million, analysts and the markets are saying that the coverage needed is only P350 million. The fatty excess of P100 million can likely grease certain people’s pockets.
Sources within the agency also revealed that only three prospective bidders have turned up and “shown interest:” a) Federal Phoenix (part of the Zuellig Group) which used to employ the current GSIS SVP for Insurance, lawyer Maria Obdulia Vitug-Palanca; b) Pioneer Insurance (a new entrant) one of whose senior executives is lawyer Betty Medialdea, the wife of Executive Secretary Salvador Medialdea and c) Malayan Insurance owned by the Yuchengcos.
Then again, there exists a provision in all government tender documents that allows the procuring entity to stop and cancel the bidding process at anytime — without penalty. Or, simply accept the market’s verdict and work within the limits imposed by it.
Now, as the sources averred, that given the market’s rejection of GSIS officials’ folly, as the market held its ground on a realistic P350-million appraisal vs a bloated P450-million ABC trotted out by GSIS ex-chair Francisco Duque-led people, will GSIS calmly accept the market verdict even if it means a cool P100-million “lost revenue” to the manipulators?
Or, will it reject what the market prescribes and consider another bid? Or, worse, re-channel the programmed P100-million overprice to some other “activity?”
Will the GSIS Board now without Duque have the courage to initiate an investigation into this aborted mess to insure the proper usage of government funds?
Millions of government workers particularly public school teachers are waiting for answers — their hard-earned money is at stake.
Three major issues are in question.
a) The three bidders for the overpriced 2018 treaty are: Federal Phoenix (Zuellig Group which used to employ SVP Palanca); Malayan Insurance and Pioneer Insurance one of its senior executives being Betty Medialdea (wife of ES Medialdea) and Malayan Insurance owned by the Yuchengcos.
b) The terms of reference (ToR) for this treaty were hatched during the time of Duque with the active participation of Palanca and then OIC-President/GM Nora Saludares. This matter never got into the Board for approval despite the injunction that all accounts P50Million and above should be reported to the Board for confirmation.
Saludares used to be the SVP for the GSIS Insurance Group (IG) and was reportedly accused of rigging bids for and in behalf of Jardine Davies;
c) The troika of Duque-Saludares-Palanca allegedly managed to inveigle Medialdea into the insurance operations resulting in the fast tracked entry of Pioneer Insurance into the GSIS.
According to the sources, before PRRD’s term, Pioneer never won any account in GSIS. Now, within just over a year into this administration, Pioneer has captured 11 out of the 31 large insurance accounts of GSIS. More than that, Medialdea has injected himself into a Cabinet level Committee which is tasked to review the “..insurable interests of the government” which will have to be done thru GSIS. Pioneer Insurance is on track all over again.
If these allegations are true, the Palace now has to step in and probe on these matters. And maybe Duque would have a lot of explaining to do before he gets his confirmation.
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P.S.
According to the sources, there are two other insurance operations both budgeted at P1Billion each which the cabal is due to “participate” in all over again: the P1 billion parametric insurance for disaster areas and the P1B insurance coverage for school buildings nationwide.
Stay tuned.

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