Gic Finalising Motor Insurance Guidelines
General Insurance Corporation (GIC), which is worried about the huge number of claims in the motor insurance scheme, is finalising a set of guidelines for speedy disposal of cases without involving the parties in protracted legal battles.
The idea of a speedy disposal of third party claims in motor accidents caught the imagination of top GIC officials after the Supreme Court Chief Justice supported a set of guidelines to help bring down the number of court cases.
GIC and its four subsidiaries have been continuously bogged down by court cases arising out of claims made by third party victims in motor accident cases.
The general insurance industry as a whole has been severely strained by delays in the settlement of cases and rising underwriting losses in the motor insurance portfolio. GIC is concerned at the increasing number of third party claims.
The public sector general insurance industry is plagued by 300,000 outstanding third party claims.It has been found that there are 2.5 lakh motor accidents in the country every year of which 60,000 result in deaths.
90 per cent of these cases go to the courts for claim settlements involving the GIC and its subdiaries, and usually develop into protracted legal battles.
GIC has already taken some steps to tackle the sitution. But these measures appear to be palliatives and the court cases drag on, resulting in a heavy drain on the coffers of GIC and its subsidaries.
To examine motor accident claims, General Insurance has set up panels with retired high court judges, surgeons and retired insurance executives as members. These conciliatory panels have been functioning in the metropolitan centres.
Besides, claims committees are being set up at different levels of GIC subsidiaries to arrive at compromises with claimants of the motor accidents.
Claims under third party cover in the Motor Insurance Scheme arise under the Motor Vehicles Act.
The act makes it mandatory for any vehicle owner to accept Act Liability for a third party as distinct from the Own damage cover of the motor insurance scheme, which is optional for the owner of the vehicle.
Under this scheme the vehicle owner is entitled to compensation from the insurer if the vehicle is damaged in an accident. However, the compulsory third party cover was till recently dealt with on the basis of unlimited liability for the insurance company.
This has now been replaced by a structured compensation scheme. Victims or their next of kin can argue for any amount before the Motor Accident Claims Tribunal (MACT) or any higher legal forum for its disposal.
The structured compensation scheme, which has been effective from November 14,1994, has been modelled on the line of the Workers Compensation Act, where the workers age and income are taken into account while determining the amount he or his dependent will be entitled to in case of a fatal accident.
Some of the cases based on unlimited liability are still pending before MACTs or other courts of law.
Besides, the number of cases based on the structured compensation scheme is rising.
As a result, third party claims settlements have become quite difficult to arrive at.
Judicial cicrles, in particular, have been suggesting the formulation of guidelines to enable insurance companies to eschew legal battles during settlement of claims.
Only a reference and a subsequent approval is required from MACTs, which will be satisfied if guidelines are followed while settling claims for third party motor accident victims.