Private insurance firms make windfall from Railways' insurance scheme

Private insurance companies received a premium of around Rs 46 crore in the last two years from railway and its passengers while making a payout of only Rs seven crore in claims under the national transporter's travel insurance scheme, an RTI has found.

IRCTC, which is a wholly owned undertaking of the Ministry of Railways, has entered into an agreement with three private insurance companies through limited tender - Shriram General Insurance Company Ltd, ICICI Lombard General Insurance Company Ltd and Royal Sundaram General Insurance Company Ltd for its Optional Travel Insurance Scheme which was launched in September 2016 with a premium of Rs 0.92 per passenger.

This facility is for confirmed/RAC railway passengers who booked e-ticket through the official website of Indian Railway Catering & Tourism Corporation (IRCTC).

Under the scheme, a sum assured is paid to the victim/family or legal heir of the victim as the case may be in case of death/injury of reserved passengers due to train accident/untoward incidents.

While the national transporter bore the insurance premium till August 31, 2018, the cost was transferred to passengers since and the premium was revised to Rs 0.49 per passenger in October 2018.

According to the RTI reply received by Madhya Pradesh-based social activist, Chandra Shekhar Gaur, while IRCTC has paid Rs 38.89 crore to insurance companies, passengers have so far paid Rs 7.29 crore in the past two years.

The travel insurance provides a coverage of Rs 10 lakh for death and permanent total disability arising out of any train accident or other untoward incident. For permanent partial disability you get Rs 7.5 lakh. The Rs 2 lakh coverage for hospitalization expenses for injury is over and above the death or disability coverage.

Acts like accident, robbery, dacoity and other violent acts during the train journey are covered by the policy.

Insurance companies received 206 claims in the two years, while 72 were rejected.

Officials, when contacted, said claims were less in the last two years as the number of rail accidents had dipped significantly. Railway accidents have decreased from 118 in 2013-14 to 104 in 2016-17, to 73 in 2017-18 and further to 59 in 2018-19.

Railways are also carrying more passengers - there is an increase of 2.09 per cent in the number of passengers carried by the Indian Railways during 2017-18 as compared to 2016-17 and 0.64 per cent increase in 2018-19 as compared to 2017-18.