Govt plans revamp of auto insurance policy

Uninsured vehicles plying on highways are set to be offered on-the-spot insurance cover, with the government discussing a plan that includes deducting the premium from the owner’s Fastag account.

The new approach to motor insurance has been brought about by an alarming rise in uninsured vehicles on the road, estimated to be as much as 40-50% of all vehicles in India.

According to two people aware of the development, the Centre is discussing a mechanism that will provide mandatory third-party insurance cover for motor vehicle owners at the first instance when their uninsured vehicles are impounded by traffic police or transport department officials.

Third-party insurance covers medical and treatment expenses for accident victims.

“The hand-held devices with police and transport department officials would not only check for insurance status of vehicles using the road and highway ministry’s Vahan app but also provide instant third-party insurance options with relevant policies of general insurers linked with the transport department’s network,” said one of the persons quoted above.

“For instant payment of premium for on-the-spot policies, insurance companies could also be brought to the Fastag platform along with banks, with the premium getting deducted from Fastag balance,” he added.

An official at the General Insurance Council (GIC) said spot insurance was also discussed in a meeting of the Council, and recommendations for its implementation are being formulated and will be discussed in a 17 March meeting.

GIC is a body of the non-life insurance industry that guides government policy.

The premium for third-party insurance depends on the size and age of vehicles, ranging from Rs. 2,072 for 1000cc-passenger vehicles to Rs. 3,221 for 1000-1500cc vehicles and Rs. 7,890 for vehicles with above 1,500cc engines.

Questions sent to the spokespeople for ministries of finance, and road transport and GIC remained unanswered till press time.

Officials across ministries said some way forward on the proposal would be made soon, and state governments would also be roped in to bring in the true integration of insurance, transport and prosecution agencies for the larger goal of making Indian roads safer.

“Insurance regulator IRDAI has already allowed insurance companies to issue temporary or short-term motor insurance for impounded vehicles. This could be replaced by a full third-party cover for the uninsured once systems are linked for delivery of the product,” said another official, who did not want to be identified.

Legal issues related to the changes are being studied, and if needed, the Motor Vehicles Act and insurance rules could be amended to allow for the roll-out of the proposal.

Even as India embarks on a plan to build a network of highways and expressways for fast movement of passengers and goods, road safety continues to be a major problem — it’s a developmental issue, a public health concern and a leading cause of death and injury.

At least one in 10 people killed on the road across the world is from India, according to the World Health Organization. This move will ensure immediate funds for road accident victims, thus helping reduce fatalities on Indian roads.