Supreme Court asks IRDAI, industry to explore policies to improve motor insurance coverage

This development underscores a long-standing concern within the motor insurance industry, where insurance penetration has stubbornly remained around the 50 percent mark, a figure industry practitioners describe as deeply worrying.

The Supreme Court on October 30 expressed the need for uniform motor vehicle policies and called for immediate corrective measures as over half of all the vehicles plying are without valid insurance.

According to a news report by LiveLaw, the SC bench made the remark while hearing an appeal filed by National Insurance Company against a Telangana High Court order that had directed the insurer to pay around Rs 10 lakh in compensation, along with interest, to the family of a victim who died in a 1996 road accident.

During the proceedings, the judges interacted with general managers of 22 insurance companies, representatives of the Insurance Regulatory and Development Authority of India (IRDAI), and the General Insurance Council.

It was at this point that Senior Advocate Joy Basu, appearing for the respondents, informed the court that nearly 50 percent of vehicles in India remain uninsured.

Basu went on to urge the court to consider coercive measures to tackle the situation. The SC bench observed that a system similar to impounding of vehicles for unpaid challans could be explored to enforce insurance compliance.

The court is expected to deliberate on the possible enforcement mechanisms and policy reforms to address the large-scale non-compliance of motor insurance in India.

This development underscores a long-standing concern within the motor insurance industry, where insurance penetration has stubbornly remained at around the 50 percent mark, a figure industry practitioners describe as deeply worrying.

“One of the biggest challenges is the lack of accessible, real-time data,” Shriram General Insurance CEO had told Moneycontrol. “As insurers, we often don’t have updated contact details or registration information for many vehicle owners. In several cases, the vehicles may have already been scrapped but continue to exist in official records.”

Another executive said told Moneycontrol that insurers have urged states governments, particularly in states like Odisha, where some companies act as lead insurers, to send mass messages to owners of uninsured vehicles.

“We’ve also raised this issue with the IRDAI, but beyond that, there’s little insurers can do. We don’t have enforcement powers,” the person said, stressing that the regulatory and enforcement gap is significant and can only be bridged through government intervention.