The Philippine Insurers and Reinsurers Association (PIRA) rolled out last Monday a system that speeds up the collection of taxes from Compulsory Third Party Liability (CTPL) insurance of motor vehicles.
Labeled as Certificate of Cover Authenticating Facility 2.0 (COCAF 2.0), the system is an upgraded version of the insurance industry’s answer to the problem of spurious CTPL policies generated by non-industry players. It is meant to ensure that all CTPL policies issued to motorists are genuine and generates tax revenues for the government.
Motor vehicle owners in the country are required to get a CTPL insurance whenever they register with the Land Transportation Office (LTO). The insurance carries a P100,000 coverage that pays for damages from death or bodily injuries of third parties in case of road accidents.
In the past, there have been reports of fake CTPL policies being sold by questionable parties at LTO branches and insurance policies being reproduced many times and sold to unsuspecting motorists.
To once and for all address these issues, PIRA has come up with the original COCAF and linked insurance companies with the database of the LTO. The interconnection has made possible the authentication of every insurance policy via the Internet or text messaging and a system of verification that makes sure every insurance policy is sold only once to a motor vehicle duly registered with the LTO.
The second version of COCAF launched last Monday now provides a link to a Bayad Center that facilitates speedy collection of premiums, commissions and taxes.
Mr. Michael F. Rellosa, chairman of PIRA, said it is the Bayad Center that separates the payments for the premium, the commission of the insurance agent/s and the different taxes – all electronically.
“This system is beneficial to all parties. Motorists are assured that the CTPL policies they’re buying are authentic, insurance companies get their premiums fast, and the government gets to collect correct taxes pronto,” he said.
Insurance companies and their agents are required to enroll into the system and open “electronic wallets” or “e-wallets” which must contain an initial cash deposit equivalent to the cost of a single CTPL policy to be able to use the system.
If the agent sells a policy, the Bayad Center automatically deducts from his e-wallet corresponding premium and credits it to the insurance company, separates the taxes and credits them to the government, and leaves behind the commission.
“It’s purely electronic,” Mr. Rellosa said. He added that the Insurance Commission will soon have a gateway to the system for real-time monitoring.
For its first day, COCAF 2.0 was able to process a total of 6,808 transactions, a bit low for a Monday. Rellosa expects the number to go up in the coming days.
He noted that a total of 34 member companies of PIRA have already enrolled with the system, with more set to formalize their entry in the coming weeks.