Non-life insurers buck deal between Stradcom, LTO

MANILA, Philippines - The Philippine Insurers and Reinsurers Association (PIRA), the trade organization of country’s non-life insurance industry, is protesting the alleged “midnight deal” on the compulsory third party liability (CTPL) on vehicle registration.

In a press statement issued yesterday, PIRA claimed the agreement between the Land Transportation Office (LTO) and Stradcom would result in additional fees for vehicles registration, along with the CTPL.

PIRA chairman Michael Rellosa said this move of Stradcom, the private service provider of the LTO, was made public through news reports published over the weekend. He said the “midnight deal” would earn Stradcom an additional P600 million a year.

He also urged the incoming Aquino government to look into the matter.

“This is clearly a midnight deal as it is happening merely days before the change in government,” Rellosa said. “The new government should look into this because this will be an additional burden on the part of motor vehicle owners who are already suffering from the long list of computer fees that Stradcom is charging them,” he added.

In the same statement, the PIRA head noted that there is no need for the system being pushed by Stradcom as there is already an existing system that authenticates CTPL policies.

The Certificate of Cover Authentication Facility (COCAF) was developed by the insurance industry hand-in-hand with the Department of Finance (DOF) to make sure all CTPL policies are authentic and issued only once. The system was introduced three years ago and now includes a means of collecting taxes and remitting it to the Bureau of Internal Revenue (BIR).

“This system is already in place and does not cost car owners anything,” he said. “And the best part now is, this system will now be connected to the gateway of the Insurance Commission which will monitor it in real time.”

The gateway allows the commission to ensure that all CTPLs are authentic, what insurance company issued the policy, and that the appropriate fees to government especially those due the BIR, are collected and paid to the appropriate agencies.

In a separate statement, Stradcom vice president Ramon Reyes also endorsed the importance of the IC gateway to ensure that all CTPL certificates of cover issued to car owners by insurance companies are authentic. “The IC gateway is the motorists’ assurance that the CTPL COC came from a duly licensed insurance company,” he added.

He claims that the IC gateway is connected to the Expanded Certificate of Cover Verification Facility (ECOCVF), the system developed by Stradcom, which is being contested by PIRA’s COCAF.

COCAF is interconnected with the LTO and insurance companies pay Stradcom P40 per CTPL policy as interconnection fee. The P40 fee is being absorbed by insurance companies.

Last week, Stradcom advised insurance companies that the amount will be raised to P53.57 for motorcycles and P71.43 for other vehicles due to costs incurred in upgrading the LTO system.

Rhoda Ipac, Stradcom’s vice president for business connectivity, even praised the present system being used by the industry as “providing the necessary tools to eradicating duplicate and fake CTPL policies.”

“Obviously, Stradcom is in a hurry to raise the fees and could not wait for a reply from insurance companies,” Rellosa said.

Stradcom has been in control of LTO’s computers since 1998 when it bagged a 10-year build-own-and-operate contract to computerize the agency’s records. Since then, it has been charging computer fees on all transactions - from driver’s licensing to motor vehicle registration.