The Hindu Business Line : GIC move to rein in third party claims

How it works
Insurance particulars of the vehicle immediately known, skipping it not possible.
Accidents will be conveyed real time to insurers.
Call centres are being set up to handle claims.

Mumbai , Dec. 22

Claims against commercial vehicle accidents may soon see quick settlement. Also, commercial vehicle operators will not be able to skip taking third party insurance.

Insurance companies, headed by GIC, Regional Transport Offices (RTOs) and police stations across the country may come together on an online, real-time computerised network to avoid lapses in the claims mechanism.

GIC, the manager of the soon-to-be formed third party motor insurance pool for commercial vehicles, will have online connectivity with Regional Transport Offices and police stations across the country.

Dialogue on an arrangement is currently on between the Ministries of Finance, Surface Transport and Home and the system is expected to be in place by April.

Despite purchase of third party insurance for vehicles being mandatory, a large number of vehicle owners skip the cover. The advantage of an on-line system is that data will now be available on a real-time basis. The `motor pool' will be a fund created out of third party insurance premium received by the 12 non-life insurance companies based on their market share. In the case of claims, the reserves will be used to make payouts.

Immediate Verification

"The pool system's on-line connectivity with RTOs and police stations will help the immediate verification of the insurance particulars of a vehicle. Insurers will also receive immediate intimation when vehicles meet with accidents," said a senior official at GIC.

The motor insurance pool is estimated to handle about Rs 4,000 crore of premium and service around 4-5 crore policies. The pool will take off in the New Year when the free price regime kicks in.

High claims

Third party motor insurance for commercial vehicles has been a loss-making proposition for insurers with claims ratios soaring to 250 per cent. GIC, which is the manager of the pool, is initiating steps to control claims.

There will now be an on-line system between the insurers and GIC and data will be accessed through the Internet.

Call centres are also being set up to manage the large number of claims. The transfer of premium received by insurance companies and claim payouts to insurers will be made on a weekly basis, said the GIC official. Since, managing a large pool will be akin to running a small company, committees having representatives of all the 12 non-life insurers are being set up to oversee various functions.

They include underwriting, claims management, IT, investment, statistical and accounting committees.

Statistical Committee

"The idea is to lay down the most cost efficient procedures for registering, processing and settlement of claims.

The statistical committee for instance will collect data for analysing claims and the reports will be sent to the Government and IRDA," said a GIC official.

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