Ask state govts to provide mandatory cover for uninsured vehicles: Irdai
With almost 57 per cent of the vehicles plying on Indian roads uninsured, insurance regulator IRDAI has asked the general insurers to talk to transport authorities of 28 states and eight union territories to provide mandatory covers for the uninsured vehicles. The Insurance Information Bureau of India (IIB), set up by the IRDAI, has reported that uninsured vehicles still remain, an area of grave concern in India with 57 per cent vehicles on road being uninsured with 17 states reporting more than 50 per cent uninsured vehicles. According to Vahan, the tech platform designed by the Ministry of Road Transport and Highways, total vehicles registered till date were 33.68 crore. This means over 19 crore vehicles on Indian roads are not insured. Using Vahan and IIB data, the IRDAI has asked us to take up the defaulting cases with the state governments for covering all vehicles, said the CEO of a general insurance company. The IRDAI had earlier developed a scheme, where each insurer has been assigned a state or a union territory that has to be nurtured by the same insurer. The vehicle insurance issue was discussed in the two-day conclave of industry CEOs and the IRDAI which concluded last week. The regulator has worked out strategies to be implemented by the insurers to achieve full insurability of the nation by 2027 in some segments, including motor. The new strategy will benefit state governments and general insurers as collecting fines will be a huge source of income for state governments from the defaulting vehicle owners and insurers will get more business from insuring such vehicles. The new drive is expected to kick off in a months time and complete the process by FY2023-24, according to an official source. As per the Amended Motor Vehicles Act (MVA) of 2019, the fine for driving without insurance is Rs 2,000 for the first offence and Rs 4,000 for the subsequent offence. It could also lead to imprisonment for 3 months within the law's discretion. The fine is applicable as per Section 196 for the offence Driving without insurance. As per the MVA, third party (TP) liability insurance of all motor vehicles is compulsory, but non-insurance of motor vehicles is a hard reality. A third-party insurance cover is a specific policy that protects the car owner/ driver against legal or accidental liability, financial loss or damage to property. The cover also protects the owner/ driver in case of a third-party injury or even death of the person because of the vehicle. As many as six states - Maharashtra, Tamil Nadu, Uttar Pradesh, Karnataka, Gujarat and Kerala - contribute nearly 50 per cent of the total policies and claims, IIB report says. Motor is the second largest line of business (after the health segment) in the general insurance industry with gross underwritten premium in the ten months ended January 2023 at Rs 65,363 crore with a growth rate of 15.96 per cent. The average settlement amount for death claims in FY 2019-20 was Rs 914,181 and for injury claims it was Rs 265,115, and both showed an increase over the previous year. The highest average for death claims was in Kerala at Rs 12.31 lakh and lowest in West Bengal at Rs 6.3 lakh, according to the IIB report. Generally, the Union Territories and the Southern States had a high average as compared to other States. The uninsured vehicles largely consist of two-wheelers and this is quite obvious as nearly 75 per cent of the total vehicles in India consists of two-wheelers. In this class over 60 per cent of the vehicles remain uninsured whereas cars are largely insured and the uninsured numbers are quite low at around 10 per cent, IIB said. The percentage of vehicles which do not renew their insurance after the first year is menacingly high at 52 per cent on an average for the years in consideration, which is again due to the fact that mostly two wheelers fall out of the insurance net at the time of first renewal of the insurance policy, it says.
Thursday, March 9, 2023 at 12:04 am