E&R/PRESS/30/MDS/DG

Consumer Education and Research Society (CERS), Ahmedabad, has urged the Union Minister for Road Transport and Highways to ensure effective implementation of Motor Vehicles Third Party Liability (TPL) insurance cover.

Relying on a note of dissent submitted by Prof. Manubhai Shah, Chairman Emeritus, CERC, on the report of the Justice Rangarajan Committee on Motor Vehicle Third Party Liability Insurance Cover, CERS wondered in its letter to the Minister, “Only because the authorities do not take adequate measures and insurance companies are not able to collect adequate premium, should third parties suffer?”

In fact, the violation of statutory requirement is so great that premium collected by the four nationalised insurance companies for 2001 for the TPL cover is about Rs. 1,108 crore whereas it should have been Rs. 7,155 crore. This information is known through the data collected and provided by the Ministry of Road Transport and Highways to the Justice Rangarajan Committee, set up by the Insurance Regulatory Development Authority (IRDA).

The Justice Rangarajan Committee has recommended that vehicles should carry a sticker with particulars of insurance policy and the name of the insurance company responsible for the TPL, and that petrol pumps should refuse fuel to vehicles that do not have the sticker.

The Committee also suggested that RTO officials and the police should conduct random checking of vehicles for the TPL cover which is as such compulsory. CERS has urged the Ministry to take appropriate action to ensure that people take the TPL cover just as seriously as a driver’s licence.

In its letter it has urged the Ministry to abandon the present approach to “hit and run” cases and innocent victims and/or their dependents should get full compensation.

CERS has suggested that a solatium fund be set up through contribution by insurance companies, depending on their total premium income to ensure full compensation even for victims of hit-and-run cases.

Insurance companies have suggested that well-off or affluent people should take their own insurance cover rather than putting a burden on insurance companies. CERS rejected this. If this recommendation is accepted, there shall be no accountability on the part of persons responsible for accidents.

CERS also disagreed with the Tariff Advisory Committee recommendations of de-tariffing own damages insurance. Lessons may be learnt from the USA insurance industry, wherein State Insurance Commissioners and a National Association of Insurance Commissioners are operational.
In India too a benchmark premium can be evolved and insurance companies can be given freedom to charge a 15 to 25 per cent lower or higher premium, depending on the facts of the case, condition of vehicles, history of claims, record of the owner/driver, density of traffic and other relevant facts. Such a system is already operating in the USA.

Date : 27/07/2003
Place : Ahmedabad

Pritee Shah
Editor, INSIGHT - The Consumer Magazine