Page 6 - Insurance Times August 2018

Insurers cites difficulty in
offering cover to cars
having PUC Certificates
As per the directive given by the
Ministry of
Road Trans-
port and
Highways,
the Gen-
eral Insur-
ance Com-
panies have expressed displeasure,
to provide third party insurance
cover only to vehicles which possess
valid pollution under control (PUC)
certificates.
The Ministry had earlier said, "It
must be ensured that no third-party
insurance policy is issued or renewed
without ascertaining the availability
of a valid PUC. In the case of trans-
port vehicles, the availability of a
valid fitness certification is also man-
datory."
However, according to insurance
companies it's not practical to ex-
ecute the Ministry's latest directive.
"It may not be possible to imple-
ment this directive. We are planning
to meet the officials of the IRDA to
explain the difficulties involved in
implementing the PUC certificate
order," said a senior official of a lead- ferring to the recommendations of the Supreme Court
ing general insurance company.
In an order dated August 10, 2017
passed by the Supreme Court in Writ
Petition (C) No. 13029 of 1985 in MC
Mehta vs Union of India and others,
Court had directed that the insur-
ance companies will not insure a
vehicle unless it has a valid PUC cer-
tificate on the date of renewal of the
insurance policy. The order also
added that the fitness certification is
also a mandatory requirement for all
validly registered transport ve-
hicles."
6 The Insurance Times, August 2018
Insurance payouts to railway passengers rise despite
reduction in train accidents
Insurance claim payment to train accident victims have increased by five times
in FY18 against the previous fiscal despite drop in the
number of accidents. This trend is visible mainly be-
cause of IRCTC has extended free insurance cover to
passengers booking online tickets starting December
2016, as part of the Governments digital push.
Insurance Companies paid a total claim of Rs. 3.5
crore in FY18 from insurance companies, 5 times of Rs. 75.5 lakh paid out in
FY17. The optional travel insurance scheme is handled by three companies: Royal
Sundaram General Insurance, Shriram General Insurance and ICICI Lombard
General Insurance.
Paying Rs. 1 for insurance up to Rs. 10 lakh was optional for online ticket book-
ing 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. The digitisation push of November
2016 is hitting on IRCTC pocket. Not only did it lose earnings from the service
charge on e-tickets, it also ended up paying insurance premium for an increas-
ing number of passengers (about 65 per cent of the total) booking tickets online.
Supreme Court asks for mandatory Third party insur-
ance for two, four-wheelers
The Supreme Court has said third party insurance of four-wheelers and two-
wheelers be made "mandatory" so that victims of road
accidents could get compensation and insurance firms
should look into it from a "human point of view" and not
from commercial point. The apex court said this while re-
Committee on Road Safety and observed that over one
lakh people were dying in India every year in road accidents.
The committee, headed by former apex court judge Justice K S Radhakrishnan,
has recommended that at the time of sale of two or four wheelers, third party
insurance should be made mandatory for a period of five and three years re-
spectively instead of one year.
In its report, the committee has said that around 18 crore vehicles were plying
on the roads of the country out of which only six crore have third party insur-
ance, and victims of road accidents were not getting the compensation as ve-
hicles do not have third party cover. The bench said that third party insurance
should be made mandatory for four wheelers for a period of three years and for
two wheelers, it should be done for five years.
During the hearing, the counsel appearing for IRDA said that third party insur-
ance should not be made mandatory and the authority was also looking into
the issue and they would take around eight months time to decide on it.