ISAP seeks extension from April deadline

The non-life insurance industry is asking the Land Transportation Office (LTO) for an extension of up to June this year for the implementation of a joint memorandum circular affecting the certificates of cover (COCs) and vehicle registration.

The original implementation date was set for April 15 under the joint memorandum circular signed by the Insurance Commission (IC) and the LTO last March 14 this year. Recently, it was extended to April 22 upon the request of the industry and recently, the IC agreed to their recommendation for an extension.

Industry association Insurance and Surety Association of the Philippines (ISAP) decided to ask for the extension after the entire body decided that it would appoint only one information technology (IT) application provider. ISAP is composed of all non-life insurance companies numbering 114.

The IT application provider based on the joint memorandum circular would implement a system of registration and verification of compulsory third party liability (CTPL) insurance COCs using IT solutions. Issuance of CTPL should lead to the unhampered registration of vehicles with the LTO.

The joint effort was designed to stop the proliferation of fake COCs and the illegal registration of vehicles. The effort started as early as last year when transportation officials uncovered several cases of one registration serial number covering several vehicles. That resulted in losses of millions of pesos in terms of government revenues while leaving the vehicle owner unprotected.

According to the ISAP, six IT firms have expressed interest in undertaking the registration system. The six companies were given up to May 3 to submit their bid proposals.

The winning bidder must establish the system and make it operational by June this year.

IT provider D: Tech Management Inc. had already started the system after it was said to have been endorsed and hired by 16 non-life insurance companies involved in the issuance of COCs. The number of insurance companies was said to have expanded to 20.

However, several of the insurers complained of the inability of D: Tech to implement the program efficiently. The complaints were channeled to the IC and the LTO.

At the same time, the majority of the non-life insurers wanted a different IT provider to handle the registration and verification system. That in effect would create a situation wherein there were two IT providers without a central database.

That was in direct violation of a provision in the joint memorandum circular which called for "a database center . . . completely independent and solely built for registration and verification processes of certificates of cover."

IC Commissioner Eduardo T. Malinis had expressed apprehension over the situation of having two IT providers without a central database.

Malinis said that the IC was not concerned with whichever the insurers select for as long as there was only one provider.

"Having two IT providers would only defeat the main purpose of controlling the issuance of the COCs and the vehicle registration," the commissioner said. "That would only continue the decentralized system but raise it to an electronic level since the data of one provider would not be available to the other provider." – Ted Torres