Mumbai: In a major relief to owners of older cars, the insurance regulator has made it mandatory for non-life companies to offer the compulsory motor third-party insurance cover online. Hitherto, insurance companies were offering only the comprehensive cover online and it was largely the public sector insurers who were entertaining walk-in customers.
In a circular to all non-life companies, the Insurance Regulatory and Development Authority of India (IRDAI) said that insurance companies must ensure easy availability of motor third-party cover, including online, and under no circumstance should deny a request for third-party cover.
The IRDAI circular follows a directive from the Supreme Court Committee on Road Safety requiring state governments to conduct checks of vehicle to ensure that all of them have the mandatory third-party insurance. The panel has said that in case a vehicle does not have third-party insurance, the vehicle should be detained until such time the third party insurance certificate is produced by the vehicle owner. At present, traffic authorities merely penalise the vehicle owner in case he is not able to produce a valid third party insurance cover.
The IRDAI said, “Several states have reported back that insurers have a cumbersome process that involves inspection of the vehicle concerned and that vehicle owners have complained that it is not an easy process to obtain insurance.”
According to non-life companies, they are exposed to moral hazard when they receive a proposal with a break in insurance. “Very often the proposer comes with an application after an accident and the recording of the time of the accident in the case of police complaints is not always accurate,” the official said.
Road accidents kill around 17 people every hour in India. The only compensation for these victims is the motor third-party insurance cover. The relative of the victims get relief after filing a claim in the motor accident claims tribunal. In a large number of cases where there is no insurance cover, the vehicle owner is liable. However, it is difficult to enforce a claim on individuals. Also, the victim gets a small compensation from a fund contributed to by insurance companies.
A total of 4,80,652 road accidents took place in India last year, resulting in loss of 1,50,785 lives and inflicting serious injuries on 4,94,624. This has resulted in motor insurance being an unprofitable portfolio for insurance companies. Although the regulator has taken measures to offset the losses, insurance companies do not go out to acquire this business as the administrative costs are high, particularly in the case of two-wheelers.
Source:-The Times of India.