According to figures compiled by the General Insurance Council (GIC), over half of the vehicles on Indian roads do not have a proper insurance cover. Out of the 8.5 crore vehicles that at present are running on the roads, only 4 crore are insured. That means nearly 53 per cent of the vehicles are running without any insurance cover.
“There are an increasing number of vehicles running on road that do not have a proper insurance cover,” S L Mohan, chairman, GIC told Financial Chronicle.
Most vehicle-owners do not renew their insurance policies while many settle for a limited cover involving third party liability when the policy is renewed. Officials of the Insurance Regulatory and Development Authority (IRDA) told Financial Chronicle that they rely on the data from the insurance council on this front.
Industry officials also agreed that delinquency rate on the part of vehicle-owners is very high. “The average renewal rate for the motor insurance industry is around 60 per cent. There is also a tendency among consumers to change the insurer after the first year of buying the insurance cover,” a senior official of Oriental Insurance Company said on conditions of anonymity. The scenario gets worse when it comes to older vehicles. Both public and private sector insurers said that almost 80 per cent of the vehicle-owners purposely allow the insurance policy to lapse after owning a vehicle for four to five years.
Two-wheeler owners contribute their bit to the problem in a big way, too. “The absence of an insurance cover among two-wheelers is more rampant. Almost eighty per cent of the two-wheelers running on the road do not go for insurance cover beyond the first year,” S L Mohan said.
Private insurers HDFC Ergo General Life Insurance agrees. “Renewal rate in two-wheelers is very poor,” Ritesh Kumar, managing director and CEO, HDFC Ergo General Life Insurance, told Financial Chronicle.
According to Anuj Gulati, director- services and business development, ICICI Lombard General Insurance, consumers save on premium amount by compromising on the insurance cover.
Experts point out that the lack of enforcement of laws is also one of the major reasons for vehicle-owners choosing to drive around without proper insurance cover.
Deepak Kapoor, transport commissioner, Maharashtra state, said, “In the absence of an insurance cover, the driver can be arrested under section 196 of the Indian Motor Vehicles Act. Around 1.49 lakh drivers in Maharashtra during March 2008 to January 2009 have been given memo for non-production of insurance papers or expired insurance.” Kapoor said drivers are asked to produce documents within three days of issuance of memo.
According to the annual report by Insurance Regulatory and Development Authority (IRDA), the premium underwritten in the motor segment in the first quarter of the financial year was Rs 3,624.23 crore, constituting 41.29 per cent of the total premium underwritten. The contribution from the public and private life insurers in the total motor premium was Rs 2,151.19 crore (59.36 per cent) and Rs 1,473.04 crore (40.64 per cent) respectively
Source:mydigitalfc
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