COVID-19 impact: Truck operators write to IRDA, seek extension of third-party vehicle insurance cover
Hit by a double whammy of manpower shortage and an economic slowdown, the transport industry is looking to the insurance regulator for a breather.
Two organisations representing individual truck operators have written to insurance regulator IRDA seeking an extension in the risk cover provided under the mandatory third-party motor vehicle insurance policy.
The government had deferred the deadline for renewal of the mandatory third-party insurance for vehicles until May 15, while the extension granted for other statutory compliances such as national permits and fitness certifications hold until June 30.
The annual premium for the mandatory third-party insurance needs to be paid up-front while buying a new vehicle or renewing the policy.
While the All India Motor Transporters' Congress (AIMTC) has sought an extension of comprehensive motor insurance for goods carrying vehicles, including third-party and voluntary insurance valid before March 25, 2020, for the entire financial year, the All India Transporters' Welfare Association (AITWA) has sought a three-month extension of the risk cover at no extra premium.
"AITWA has approached the IRDA chairman to review a reduction in motor vehicle premium for 2020-21. We have cited copies of USA's motor insurance companies which have given 25% waiver in premiums this year (calculated monthly) and refunded to their customers. We have sought for a three-month extension - against 12 months charge, we have sought a 15-month cover", Abhishek Gupta, Joint Secretary, AITWA told CNBC-TV18.
"The average annual insurance premium per truck is Rs 60,000 and many small fleet operators are not earning enough to be able to cover this. We don't expect economic activity to pick up substantially in the next six months, and most of transporters' costs is going towards paying salaries and operational expenses. Truck and bus operators have not been earning for the last two months now. We have asked for breathing space" said Navin Gupta of AIMTC.
AITWA, in its letter to IRDA, said commercial vehicle movement is at a virtual standstill for the past two month with the current level of movement at only about 12 percent.
"In these three months there have been almost no accidents hence, no claims. Generally the insurance premium is maintained at such a level that claims are met fully and a good margin remains with insurance companies. It will not be wrong to say that in these three months, the entire collection of insurance premium pertaining to this period is net revenue for insurance companies", Mahendra Arya, national president, AITWA, said in the letter.AITWA has urged IRDA to follow international norms where insurance companies refund the premium saved as additional revenue by way of extra coverage of risks.