The demand for a separate legislation for insurance compensation in case of motor accidents, raising the motor third-party premium and fixing the claim limit are issues that are likely to dominate the meeting between finance minister P Chidambaram, insurance regulator Irda and non-life insurance players on Monday.
Currently, compensation issues are covered under the Motor Vehicles Act, which also deals with many issues including traffic and road safety.
?The third-party insurance on motor vehicles is a growing portfolio.The insurance compensation issue, on its own, has a major social impact as it affects the lives of many people across different strata of the society. Therefore, it is important that these issues come under a separate Act,? a senior official of the General Insurance Council ? representing the non-life insurance companies ? told FE requesting anonymity.
The official said these issues are likely to be discussed threadbare during Monday’s meeting as there have been several cases where the compensation amount was considered ‘very high’. There were also instances of delays in claims and fraudulent claims. Besides, the number of uninsured vehicles on road are also high.
The liability on account of third-party motor insurance every year is estimated to be around R10,000-15,000 crore. The Motor Vehicles Act does not prescribe any claim limit for motor accidents, while the Motor Vehicles (Amendment) Bill suggests a cap of a maximum compensation of R10 lakh by the insurance company and anything more than that, the Bill says, will have to be coughed up by the owner of the vehicle.
The non-life insurance members will also be relying on the report of the expert committee, led by former surface transport secretary S Sunder, which had recommended a separate Motor Vehicle Insurance Act.
Though the Irda, in March, had notified a 5-20% increase in the motor third-party premium (which has to be compulsorily bought by vehicle owners to ensure compensation for accident victims), the Calcutta High Court quashed it in June. ?Pricing (of premium) is an issue, but deregulating it will not solve the issue. We need to discuss adequate or optimum pricing,? the official said.
The need for a separate law was taken up with the government by the insurance companies when Pranab Mukherjee was the finance minister.
The ministry is considering various options, including a separate legislation, even as the Motor Vehicles (Amendment) Bill is pending in Parliament.
