Insurers ask ministry for motor third party claim filing

Since losses in motor insurance have continued to rise, non-life insurers sought relief from ministry

The general insurance industry is seeking a time-limit of one year for filing claims under motor third party policies from the ministry of road transport and highways. Currently, there is no time limit for filing claims under such policies.

Since losses in the motor insurance have continued to be on the rise, non-life insurers have sought relief from the ministry.

Bhargav Dasgupta, MD & CEO, ICICI Lombard General Insurance said as an industry they have sought that there should a time limit for filing motor third party claims.

He said that the third party liability challenge in India is that there is no time limit for submission of claims. “If you see the industry data, the number of claims that get intimated to court after 3-5 years is huge,” he said.

According to current norms of the Motor Vehicles Act, there is no limit neither on the liability of insurers in motor third-party accidents nor is there any time-limit to file them. Due to this, a victim can claim any amount in these cases after any number of years and if the insurer refuses to pay, they can approach the court.

Insurance sector estimates suggest that on an average, there is a 15-20 per cent increase in the quantum of compensation awarded by courts every year.

In the revised version of the road transport and safety bill there is a proposal that there will be a fixed compensation liability for third party accident victims will be limited. However, this bill does not mention any time limits.

Insurers had also sought motor third party policies could have a fixed liability and those in need of higher value covers could be offered.

Under the revised draft, the penalty for driving a vehicle without a valid insurance policy has become more stringent with penalties ranging from Rs 10,000-25,000 for different categories of vehicles. It also includes imprisonment for 6 months and impounding of vehicle for six months as a deterrent against driving without valid third party insurance which is mandatory for all motor vehicles.

Further, it has clarified that the death of or bodily injury to any person or damage to any property of a third party shall be deemed to have been caused by or to have arisen out of, the use of a vehicle in a public place. This is notwithstanding that the person who is dead or injured or the property which is damaged was not in a public place at the time of the crash, if the act or omission which led to the crash occurred in a public place.

Currently, combined ratios in the motor insurance segment stand at 140-150 per cent, owing to losses in the third party motor segment and high claims from commercial vehicles.

No motor vehicle in India is allowed to ply without having a valid motor third party insurance.