Monday, July 21, 2014

Insurance Cos To Propose Limited-Liability Third-Party Auto Policies

Seeking permission to issue compulsory third-party (CTP) motor cover with limited liability, general insurance companies have sent a proposal to the government. For the high-risk commercial vehicle segment, an option for additional liability limit covers is proposed, which will provide a sum over and above the basic motor policy.

According to a leading newspaper, the General Insurance Council and non-life insurance companies, led by the industry body, have sent a proposal to the Road Transport and Highways Ministry to consider third-party covers with fixed limits, similar to the pre-determined liability limits for air and train accidents.

The implementation of this model will need an amendment to the Motor Vehicles Act which currently does not stipulate any limit on the liability of vehicle owners. Non-life insurance companies say, due to this law, an increase in claim awards by courts is seen every year.

At present, combined ratios in the motor insurance segment stand at 140-150%, owing to losses in the third-party motor segment. According to an estimate, payouts by insurance companies to individuals for motor third-party related accidents have climbed 15-20%.

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