Up to 35 per cent cars on roads without insurance
| Almost a third
of cars and more than two-thirds of two-wheelers on Indian roads do not
have even the mandatory third-party liability insurance, according to an
analysis by insurance companies. Worse, many companies have found fake
motor insurance policies in circulation. Insurance companies have drawn
these estimates going by the number of vehicles registered and the total
number of policies issued. The analysis, which was not possible in the
past, has been facilitated with the help of technology. "Uninsured
vehicles is a problem in motor insurance. |
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Nearly
70 per cent two-wheelers and 30-35 per cent of four wheelers are
uninsured. It is clearly a challenge to society as victims of accidents
caused by these vehicles do not get adequate compensation," said G
Srinivasan, chairman, New India Assurance, the largest non-life insurer
and also the largest issuer of motor policies. Insurers say that one
reason why such a large number of vehicles remain uninsured is the
proliferation of fake policies. Several non-life companies have come
across fake policies issued in their name.
With advancement in
printing technology, it is possible for fraudsters to replicate policies
of existing companies, helping them get through police checks. However,
it is at the time of accident and claims from third parties that
insurers detect the existence of fake policies. Second, vehicle owners
in small cities and villages do not face any scrutiny of their
documents.
According to Srinivasan, uninsured vehicles is one of
the structural issues faced by the non-life industry in writing
motor-third party insurance, which is a drag on the balance sheet of
non-life companies. The other issues were rigid prices and the tendency
of court awards to go up in keeping with inflation. Some insurers say
that it is possible that the number of uninsured vehicles on road could
be lower than New India’s estimates because many vehicles do not ply
after 15 years.
"In our estimates, around 20-25 per cent of cars
are uninsured and in two-wheelers the uninsured vehicles are likely to
be around 50 per cent. In two-wheelers, the renewals of first year
policies are as low as 25 per cent," said Madhukar Sinha, head of
underwriting at Tata AIG General Insurance. One solution that insurers
have come up with is long-term policies.
"Issuing long-term
policies is a challenge because it is difficult to predict the movement
of income and inflation over a long period. In some markets in Europe
and USA, insurers issue only six month policies. However, there are
discussions on long-term insurance policies for some segments of
vehicles, which may be filed with the regulator for approval shortly,"
said Sinha. "In many cases, third-party proposals come to us after a
break in insurance. In such cases, the underwriting process needs to be a
bit more stringent which is difficult to implement online," Sinha
added.
source: ET
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