LTO: Verification system to stop fake insurance claim

MANILA, Philippines - The Land Transportation Office is setting up an “enhanced” verification system that will put an end to the issuance of fake compulsory third party liability (CTPL) insurance to motorists and ensure that value added taxes paid on such policies are remitted to the treasury.

The “enhanced” system was a product of the LTO, joining hands with the Bureau of Internal Revenue and the Insurance Commission to eradicate the proliferation of fake insurance policies being issued to motorists and the tax leakage that also results in anomalous CTPL transactions at the LTO. 

The system known as the Enhanced Certificate of Cover Verification Facility is an automated system that will include online and real time verification of Certificates of Cover (COCs) and ensure timely and effective collection of taxes due to the national government for CTPL insurance.

It is estimated that the government loses P250 million a year because of the proliferation of fake insurance policies for motor vehicles. 

The LTO said that the ECOCVF is an upgraded version of the present verification facility since it can detect how much taxes are due for each insurance policy issued by the insurance companies. With BIR participation in the program, the revenue collecting agency has the accurate information that can allow it to go after the insurance companies and demand correct payment of taxes.

Correct payment of taxes

The LTO, BIR IC signed in January a memorandum of agreement that paved the way for the institution of the new system to further protect the motoring public from unscrupulous insurance firms and at the same time ensure the correct payment of taxes due to the national government.

It will be recalled that insurance companies have recently scored the LTO and its computerization contractor Stradcom for laying the ground for the ECOCVF, saying it will allow Stradcom to collect higher fees from CTPL-issuing insurance firms. CTPL insurance ensures that victims of hit-and-run accidents get medical and death benefits of a minimum P100,000.

The LTO and Stradcom, however, said that the ECOCVF system will greatly improve service to motorists by ensuring the integrity of their insurance policies and at the same time collect hundreds of millions of pesos in previously uncollected revenues for the national government.

Some insurance companies insist on using the current Cover authenticating facility but their system is clearly in direct conflict with the interests of the motoring public since the system was developed by insurance companies and does not have the capability of monitoring the real time taxes due to the national government, which is the primary purpose of the new LTO, BIR and IC ECOCVF system.