Government losing P400-M to fake insurance

The government is losing P400 million in annual revenues to fake insurance coverage of motor vehicles, the Insurance Commisson (IC) said yesterday.

Eduardo Malinis, head of the IC, said at least 10 percent of the 3.2 million motor vehicles registered with the Land Transportation Office (LTO) have fake insurance.

"The government is losing money because of the spurious issuance of insurance. We can’t identify the source of the fake insurance. Even insurance firms complain that their names are being used on the fake insurance," he said.

Fake insurance pertains to the certificate of covers (COCs) issued to more than one motor vehicle. In case of accident, the vehicle with fake or duplicate COC is not entitled to insurance benefits because as a policy, each vehicle must have its own COC.

To stop the irregularity, the Department of Transportation and Communications, the LTO and the IC have agreed to come up with a program that would help monitor the insurance of motor vehicles. The three agencies have junked the memorandum of agreement (MOA) forged by former LTO chief Edgardo Abenina that was supposed to systematize the insurance coverage at the LTO. The MOA met strong opposition from various insurance companies and transport groups because it allegedly allowed a management company to act as "clearing house" for insurance firms.

The agreement also gave the insurance market to a consortium composed of over 40 insurance firms.

"We have agreed to come up with a parallel undertaking so that we can ensure the proper issuance of insurances. We’re going to work out the details of the (new) MOA," said LTO chief Roberto Lastimoso.

Lastimoso said they envision an insurance program that could prevent duplication of COCs.

"We are going to ensure that the incidence of duplicated, triplicated and quadrupled COCs will be eliminated completely. So it will not happen anymore," he said.

To date, the LTO could not monitor all COCs because its system is not yet fully computerized.

Lastimoso said they expect to finalize the mechanics by the first week of March.