July 8, 2014
General insurers have proposed to the government to allow them to issue compulsory third-party (CTP) motor cover, with limited liability. For the high-risk commercial vehicle segment, an option for additional liability limit covers is proposed, which will provide a sum over and above the basic motor policy.
Led by the industry body, the General Insurance Council, non-life insurers have sent a proposal to the Road Transport and Highways Ministry to consider TP covers with fixed limits, similar to the pre-determined liability limits for air and train accidents, reported Business Standard.
The implementation of this model will need an amendment to the Motor Vehicles Act which currently does not stipulate any limit on the liability of vehicle owners. Non-life insurers say due to this law, an increase in claim awards by courts is seen every year.
The implementation of this model will need an amendment to the Motor Vehicles Act which currently does not stipulate any limit on the liability of vehicle owners. Non-life insurers say due to this law, an increase in claim awards by courts is seen every year.
In the financial year ended 31 March 2013, general insurance companies incurred total claims of INRR176 billion (US$2.93 billion) in the motor segment, according to data released by the Insurance Information Bureau of India. “The commercial vehicle segment sees the highest losses and the most claims. If this segment’s TP liability is limited, it could lead to lower premiums for other categories,” said the chief executive of a small private general insurer.
In 2012-13, the total premium collected in the motor business segment stood at INR284.6 billion. Of the total claims, TP claims amounted to INR91.8 billion while ‘own-damage’ claims stood at INR84.2 billion.