News
26
Jun
2018
Motor claims may fall if bill is passed -The sum insured is unlimited in case of fault liability claims
MUMBAI: The general insurance industry is looking for better profitability as it believes that claims from third party may plunge after the government amends a law that would prohibit any claim after six months of the event.
A Bill is pending approval in the Rajya Sabha that will enable insurance companies to reject claims by anyone filing for compensation beyond the stipulated period.
“With delay in filing claims, fraudulent cases go up and it becomes difficult to establish a fraud,” said Vijay Kumar CEO Digit Insurance, promoted by Prem Watsa’s Fairfax. “This will help in faster compensation. It will help insurance companies in accounting of reserves, which will lead to accuracy in pricing.” Once the Motor Vehicles Amendment Bill passes in Parliament, the premium on motor insurance may fall as insurers facing lesser liability could lower the charges on automobile third party premium.
A Bill is pending approval in the Rajya Sabha that will enable insurance companies to reject claims by anyone filing for compensation beyond the stipulated period.
“With delay in filing claims, fraudulent cases go up and it becomes difficult to establish a fraud,” said Vijay Kumar CEO Digit Insurance, promoted by Prem Watsa’s Fairfax. “This will help in faster compensation. It will help insurance companies in accounting of reserves, which will lead to accuracy in pricing.” Once the Motor Vehicles Amendment Bill passes in Parliament, the premium on motor insurance may fall as insurers facing lesser liability could lower the charges on automobile third party premium.
Around 5-10per cent claims are filed after five years of an accident making it difficult for insurers to provide for reserves and settle claims. Insurers are required to set aside funds for incurred but not reported claims and reserves for outstanding claims under third party motor segment as cases go on for longer and in many cases claims are intimated after 5-7 years.
As per the government of India report (Road Accidents in India-2015), about 1,374 accidents and 400 deaths take place every day. There is no legal time limit on claims. The sum insured is unlimited in case of fault liability claims.
Third-party premium differs according to the engine capacity of a car. This financial year, Irda has reduced premium by 11.35 per cent for cars in less than 1000 cc.
Motor third party cover is mandatory for all public, private and commercial vehicles. It covers liability arising out of third party claims due to accidents. It covers liability arising out of third party claims due to accidents.