Heavy commercial vehicle owners may soon have to pay lesser insurance premium on third party insurance cover as Insurance Regulatory Authority of India (IRDAI) may consider slashing premium rates by as much as 10 percent.
“Transporters have sought a decrease in the motor third-party premiums. It is anticipated that premiums may come down by 10 percent for heavy vehicles,” a source in the know of the matter told Moneycontrol.
A circular to this effect could be issued by the end of this week, the source added.
Officials from IRDAI and members of All India Motor Transport Congress (AIMTC) met on Saturday to discuss a cut in third party insurance premium. The move came after transporters called off their nation-wide strike on late Friday night on receiving assurance from the government to look into the matter.
“IRDAI has agreed to discuss the demand to review the premium for third party insurance for heavy vehicles,” joint statement issued by the road ministry and AIMTC said.
Also read: Post strike threat by transporters lobby, IRDAI likely to moderate third party premium
AIMTC had organised a nation-wide truckers’ strike to oppose added burden of e-way bill, exorbitant insurance premium amount, soaring fuel prices and mismanaged toll collection system. The strike, which lasted eight days, saw almost 90-92 lakh truckers off road.
The union had been demanding a cut in insurance premium after the premium was hiked in the range of four to 30 percent for 2018-19.
“Since the trend of annual increase of third-party insurance premium has been continuing for last 15 years even after the opening of the insurance sector. To stop the increase per year, we have requested the IRDAI to detariff this. But, the authority has not responded to our demand,” All India Confederation of Goods Vehicle Owners’ Associations President Channa Reddy told IANS before the strike.
Every year, the third party premium is revised using a pre-set formula that looks into the engine capacity and the claims experience in that particular segment. Here, commercial vehicles like trucks and other goods carriers have been found to have the highest quantum of claims, which is why the premium hikes in this space have also been high.
Also read: Road Min revises third party insurance formula; sets ‘assured’ amount as Rs 5 lakh
For 2018-19, insurance premium for commercial vehicles whose gross vehicle weight (GVW) is less than 7,500 kilogram was fixed at Rs 14,390, between 12,000 kg and 20,000 kg was fixed at Rs 32,367 and above 40,000 kg was Rs 21,318.
While the meeting took place on July 28, a decision could not be taken due to chairman Subhash Chandra Khuntia being absent from the meeting. IRDAI chairman was travelling internationally and the members were waiting for him to take a final call on the matter. The source, however, said that they could consider the proposal partially.
Under Motor Vehicles Act, 1988 which will be replaced by Motor Vehicles Act, 2017 soon makes it mandatory for vehicles to have third party insurance.
Under the third-party insurance clause, the insurance firm agrees to pay the insured amount, on the behalf of the owner of the vehicle, to the victim in case of a serious or fatal accident.
According to Indian law, a victim can claim insurance amount in three ways for fatal or grievous accident. First, under “no-fault-liability” (Section 140, Motor Vehicle Act, 1988) dependents may claim up to Rs 50,000 for death of the victim and Rs 25,000 for permanent disablement. Next, schedule II of third party insurance provides that a victim was eligible to claim Rs 10 lakh for fatal accident and Rs five lakh for permanent disability (as per Motor Vehicle Amendment Bill 2016). Third, where both the parties may fight the case in tribunal to settle the amount.