General insurance companies have filed a public interest litigation in the Supreme Court to get a direction to strictly enforce the provisions of the Motor Vehicle Act, which makes it a criminal offence to ply a vehicle without insurance.
Despite the fact that third party motor insurance is mandated by law, general insurance companies have found that there are a large number of uninsured vehicles continue to play on the roads.
A report by ICICI Lombard General Insurance said the number of uninsured vehicles is estimated in the range of 40 per cent in the case of cars and 70 per cent in the two-wheeler segment.
According to R. Chandrasekaran, Secretary General, General Insurance Council, “It is the responsibility of the police and the Regional Transport Office to ensure that there are no uninsured vehicles plying on roads. However, strict implementation of this is a challenge.”
“Ensuring that only insured vehicles ply on the road will not only be beneficial to insurers as the size of their motor insurance kitty will become larger but also ensure that road accident victims will be compensated adequately,” said Chandrasekaran.
Third party motor insurance refers to the cover provided by insurers for damage caused to by a vehicle to a third-party, such as property or life.
Third party motor insurance is a bleeding portfolio for general insurers with high claims ratios in excess of 120 per cent in recent times. So, for every Rs 100 collected as premium, insurance companies pay out Rs 120 in claims.
deepa.nair@thehindu.co.in