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General insurers are upset over the new draft road safety Bill stating that it ‘fails’ to recognise the importance of insurance in bringing down the accident rate.
The Union Cabinet had last week approved the draft Motor Vehicle (Amendment) Bill of 2016, proposing hefty penalties for violation of traffic/driving norms. Insurance companies have a stake in this as they sell the mandatory motor third party insurance.
The proposed Bill increases the compensation in hit-and-run cases from the present ₹25,000 to ₹2 lakh. In case of death due to hit-and-run, a compensation up to ₹10 lakh would be provided to the victim's family.
Other provisions in the draft include online learning licences, increasing their validity periods and doing away with the requirements of educational qualification for transport licences.
“The role of insurance has not adequately been recognised in the proposed Bill,’’ Vijay Kumar, President, Motor Insurance, Bajaj Allianz General Insurance, told Business Line.
Steep increase in fines only lead to increase in corruption, he claimed adding that for people from affluent sections, the ₹10,000 penalty for drunken driving was not a ‘big’ deal. While they go scot free, the public will be made to pay for hit and run cases indirectly.
“A better way to ensure compliance is to introduce co-payment option where the culprit as well as insurer will share the compensation liability,’’ he added.
According to Sanjay Datta, Chief, Underwriting, Claims & Reinsurance, ICICI Lombard General Insurance Company, general insurers had sought a cap on the time frame for claims in hit and run cases. The proposed motor law does not talk of this.
Other demands such as limit on compensation and limits on jurisdiction have not been addressed. “What the Bill could have done is to improve the ground realities,’’ he added.
According to data available with the Road Transport and Highways Ministry, five lakh road accidents are reported annually in which 1.5 lakh people lose their lives.
The motor insurance segment, which was estimated at ₹40,000 crore last year, has been a loss-making proposition for the insurers with the claims ratio shooting up over 100 per cent, according to industry data.
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