Insurance payouts to travellers rise despite fall in train accidents

Mamuni Das Amiti Sen New Delhi | Updated on July 07, 2018

₹3.5 cr paid out to victims in FY18 against premium of ₹28 cr paid by IRCTC

Insurance payouts to train accident victims have surged by five times in FY18 against the previous fiscal year despite a drop in the number of accidents year on year.

This unusual trend is mainly because Indian Railway Catering and Tourism Corporation (IRCTC) has extended free insurance cover to passengers booking online tickets starting December 2016, as part of the Centre’s digital push.

The free insurance ensured that injured passengers, or next of kin of those killed in train accidents or other incidents, received ₹3.5 crore in FY18 from insurance companies, five times the ₹75.5 lakh paid out in FY17, show data from official sources.

The optional travel insurance scheme is handled by three companies: Royal Sundaram General Insurance, Shriram General Insurance and ICICI Lombard General Insurance.

Paying ₹1 for insurance up to ₹10 lakh was optional for online ticket booking between September and December 2016. A larger segment passengers who booked tickets online opted out of the insurance scheme. The fact that the scheme started in September 2016, half-way through FY17, was also a reason for the lower numbers.

From December 2016, the insurance scheme was made available free of cost for all e-tickets, with IRCTC bearing the cost.

There was a drop in “consequential accidents” as well as in the number of deaths and injuries last fiscal. FY18 saw 72 rail accidents, against 103 in FY17, data show. The number of death and injuries also declined from 607 to 254.

Free insurance not only increased the payouts to passengers, but also pushed up the total premium payment to insurance firms.

Greater premium

The premium paid grew three times from ₹9.15 crore in FY17 to ₹28 crore in FY18.

Between September 2016 and April 2018, IRCTC paid ₹37.15 crore as premium for passengers, while passengers paid ₹2.55 crore, about 7 per cent of the total payout.

The decline in accidents coupled with higher insurance premium payment in FY18 prompted a drop in premium per passenger, it appears. IRCTC now pays 68 paise per passenger inclusive of GST as insurance premium.

But the consumer-friendly move comes at a price tag for IRCTC.

The digitisation push of November 2016 dealt it a double blow. Not only did it lose earnings from the service charge on e-tickets, it also ended up paying insurance premium for an increasing number of passengers (about 65 per cent of the total) booking tickets online.

Published on July 06, 2018

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