With nearly 57% of vehicles on Indian roads uninsured, insurance regulator IRDAI has asked general insurers to consult with transport authorities in 28 states and eight union territories about providing mandatory coverage for uninsured vehicles.
The Insurance Information Bureau of India (IIB), established by the IRDAI, has reported that uninsured vehicles continue to be a major concern in India, with 57% of vehicles on the road being uninsured, with 17 states reporting more than 50% uninsured vehicles.
According to Vahan, the tech platform designed by the Ministry of Road Transport and Highways, total vehicles registered till date were 33.68 crore. This means over 19 crore vehicles on Indian roads are not insured.
“Using Vahan and IIB data, the IRDAI has asked us to take up the defaulting cases with the state governments for covering all vehicles,’’ said the CEO of a general insurance company. The IRDAI had earlier developed a scheme, where each insurer has been assigned a state or a union territory that has to be nurtured by the same insurer.
The issue of vehicle insurance was discussed during a two-day conclave of industry CEOs and the IRDAI last week. The regulator has devised strategies for insurers to implement in order for the country to achieve full insurability in some segments, including motor, by 2027.
The new strategy will benefit both state governments and general insurers because collecting fines from defaulting vehicle owners will provide a significant source of revenue for state governments, while insurers will gain more business from insuring such vehicles.
The new drive is expected to kick off in a month’s time and complete the process by FY2023-24, according to an official source.
As per the Amended Motor Vehicles Act (MVA) of 2019, the fine for driving without insurance is Rs 2,000 for the first offence and Rs 4,000 for the subsequent offence. It could also lead to imprisonment for 3 months within the law’s discretion. The fine is applicable as per Section 196 for the offence “Driving without insurance”.
According to the MVA, third-party (TP) liability insurance is required for all motor vehicles, but vehicle non-insurance is a harsh reality. A third-party insurance policy is a policy that protects the car owner/driver from legal or accidental liability, financial loss, or property damage. The policy also protects the owner/driver in the event of a third-party injury or death caused by the vehicle.
As many as six states — Maharashtra, Tamil Nadu, Uttar Pradesh, Karnataka, Gujarat and Kerala contribute nearly 50 per cent of the total policies and claims, IIB report says. Motor is the second largest line of business (after the health segment) in the general insurance industry with gross underwritten premium in the ten months ended January 2023 at Rs 65,363 crore with a growth rate of 15.96 per cent.