Jan 02, 2018 02:23 PM IST | Source:

Ensuring renewal of motor policies means additional burden for insurers

Insurers have also been directed to liaise with the police authorities to facilitate issue/renewal of third party liability policy to owners.

M Saraswathy @maamitalks

The insurance regulator has put the onus on insurers to ensure renewal of motor policies for vehicles that have been seized for not having mandatory third party cover. This will not only mean additional touch-points to sell products but also additional costs.

“We have been told to also engage with police authorities to ensure easy insurance issuance. However, when vehicles are seized, spot insurance cannot be offered and we have to inspect the vehicle thoroughly,” said a senior general insurance executive.

He added that spot insurance means higher liability from claims perspective as well as costs involved in putting technology in place to facilitate that.

The Supreme Court Committee on Road Safety had directed the States/Union Territories to periodically carry out checks to see whether the vehicle owners have third party insurance cover and in case they are not covered by third party insurance, detain the vehicle till valid third party insurance certificate is produced by the vehicle owner.

IRDAI had been told 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.

An insurance official with a public sector company said that this is completely false and customers often seek heavy discounts to buy insurance because of which they are denied a cover.

With an objective to ensure ease of obtaining Motor TP liability only policy, insurers have been advised to make available to customers on-line channel as well to obtain motor third party liability only policy.

As per estimates, almost 55 percent of vehicles running on Indian roads do not have a third party cover. According to the Motor Vehicles Act, having a third party insurance is mandatory. This cover protects the owner of the vehicles against any third party liabilities due to accidents.

Insurers have also been directed to liaise with the police authorities to facilitate issue/renewal of third Party liability policy to owners.

As per rules, motor cover on the third party liability cannot be denied by an insurance company. IRDAI has also advised companies to offer a minimum proportion of covers identical to their market share. Earlier, there was a third party motor pool where the premiums would be pooled and claims would be paid from that. This was later dismantled.
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