By a conservative estimate, 300 people die in rail accidents every year in our country; more than 100 people lost their lives in three major rail accidents over the last three months alone. Reams have been written on rail safety and numerous committees have been set up, the latest being the Anil Kakodkar panel, after the September 13 mishap near Chennai. But one aspect has not received the attention it deserves — the appalling levels of compensation to the families of victims, despite the fact that insurance can easily redress this problem. An insurance mechanism that provides for decent accident compensation will also ensure that the Railways improves its safety standards. The norm these days is to announce a compensation of Rs 5 lakh for death, roughly in keeping with the Railways Accidents and Untoward Incidents (Compensation) Amendment Rules, 1997 and the Indian Railways Act, 1989. This compares poorly with the compensation paid to families of victims killed in an international airline mishap, where the airline, in effect a pass-through entity for the ultimate re-insurer, is bound by international norms to pay at least 1 lakh SDRs, or Rs 75 lakh. The families of the victims of the Air India Express crash in Mangalore in May 2010 have moved the courts for compensation at international levels, while the carrier has paid interim relief of Rs 10 lakh.
If the airline industry can provide for a higher accident cover, there is no reason why the Railways, which carries 2.2 crore passengers a day, cannot do so too, by charging a minuscule premium. The Railways' efforts to outsource this task have not worked so far. It has been inviting bids every year, but the premiums proposed have not been acceptable to it. From September 2007 to 2008, ICICI Lombard provided a cover of Rs 4 lakh on a premium of 4.75 paise, collecting a premium of about Rs 34 crore. Since then, the premiums proposed have been over 10 paise per passenger, amounting to a corpus of more than Rs 75 crore. The Railways decided to go it alone, without, of course, implementing the insurance model. Instead of breaking into a sweat over the premium corpus, the Railways would better serve the public interest by ensuring that the cover be increased to Rs 15 lakh or more. The fact that mishaps have declined from 335 in 2001-02 to about 100 a year should enable the Railways to push constantly for an increase in accident cover. Rail travel is a fit case for general insurance, unlike motor vehicles, where the claims ratio is far too high to be an attractive proposition.
The Railways and the Insurance Regulatory Development Authority should come up with guidelines that provide for greater industry participation, while addressing the injustice meted out to the train traveller. It is inexplicable that this issue should have been overlooked, more than a decade after liberalisation of the insurance sector.