IRDAI Journal September 2017

Some Important Insurance Related Websites
Insurance Related Links
1 Insurance Regulatory and Development www.irdai.gov.in

Authority of India (IRDAI)
2 IRDAI Consumer Education Website www.policyholder.gov.in
3 Insurance Information Bureau of India www.iib.gov.in
4 IRDAI Agency Licensing Portal www.irdaonline.org
5 Integrated Grievance Management System (IGMS) www.igms.irda.gov.in
6 Mobile Application to Compare ULIPs www.m.irda.gov.in
Insurance Education Institutions
1 Institute of Insurance and Risk Management (IIRM) www.iirmworld.org.in
2 Insurance Institute of India (III) www.insuranceinstituteofindia.com
Editorial Board 3 Institute of Actuaries of India (IAI) www.actuariesindia.org

Smt. Pournima Gupte, Member (Actuary), IRDAI
Shri P.J. Joseph, Member(Non-Life), IRDAI 4 National Insurance Academy (NIA) www.niapune.com
Shri Nilesh Sathe, Member (Life), IRDAI
Dr. T. Narasimha Rao, Managing Director IIRM International Links
Shri Sushobhan Sarker, Director, National Insurance Academy
Shri P. Venugopal, Secretary General, Insurance Institute of India 1 International Association of Insurance Supervisors www.iaisweb.org
Shri V. Manickam, Secretary General, Life Insurance Council
Shri R. Chandrasekaran, Secretary General, General Insurance Council
2 National Association of Insurance Commissioners www.naic.org
Dr. Nupur Pavan Bang, Associate Director Indian School of Business
Editor 3 International Gateway for Financial Education www.financial-education.org

K.G.P.L. Rama Devi
Other Links
Published by T.S Vijayan
of behalf of Insurance Regulatory and 1 Governing Body of Insurance Council (GBIC) www.gbic.co.in
2010 Insurance Regulatory and Development
Development Authority of India
Authority of India
2 General Insurance Council www.gicouncil.in
Printed at: NavaTelangana Printers Pvt. Ltd.,
Please reproduce with due permission
# 21/1, M.H. Bhavan, Near RTC Kalyanamandapam, 3 Life Insurance Council www.lifeinscouncil.org
Azamabad Industrial Area, Musheerabad, Hyderabad
The information and views published in this
Ph: 91-40 27673787, 27665420 4 Insurance Brokers Association of India (IBAI) www.ibai.org
journal are those of the authors of the articles.
Disclaimer: Due to administrative reasons, IRDAI could not roll out the previous edition of the Quarterly Journal.
M otor insurance is one of the major
segments of general insurance sector that has
contributed to almost 39% of the total general
insurance gross direct premium collections in
2016-17. The segment assumes significance
also because of the Third Party Insurance
which is mandated by law. Due to its controlled
pricing mechanism and high loss ratios, the
third party motor insurance has been subject
to close regulatory supervision and has seen
many ups and downs. recently issued an exposure draft on
Telematics which has the potential to
However, when we talk of motor insurance, revolutionising the pricing mechanism of
there are many areas which are a cause of motor insurance by use of technology in
concern. For example, 5 States, Tamil Nadu, assessing the risk posed by a particular driver
Maharashtra, Uttar Pradesh, Karnataka and or particular vehicle. IRDAI has also
Kerala alone contribute almost 50% of the permitted sale of simple motor insurance
motor insurance policies whereas the rest of policies through point of sale persons and the
24 States and 7 UTs contribute the remaining CSCs like E-seva and Mee-Seva. IRDAI is
50%. Another analysis shows that more than also working under the guidance of the
25% of policies written during 2015-16 were Hon’ble Supreme Court and in association
that of new vehicles and more than 70% of with Central and various State Governments
policies were associated with less than 6 year to identify the uninsured vehicles and to bring
old vehicles. This is an indication of the number them under the insurance umbrella. I hope
of uninsured vehicles plying on roads. While with all round efforts by all stakeholders, with
there are several initiatives that are being simplification of products and with use of
taken by the Government through its technology, the uninsured vehicles would be
legislative and executive powers and IRDAI brought into the insurance ambit which
with its regulatory framework, the statistics would ultimately be beneficial to one and all.
indicate that much more needs to be done.
IRDAI Journal September - 2017
Government has identified crop insurance as

In order to simplify and promote ease-of- one of its important flagship programmes and
selling motor insurance policies, IRDAI has keeping in view the importance of the
recently issued the Guidelines on Motor Service segment, the next issue of the Journal would
Providers regularising the role played by focus on crop insurance.
automobile dealers in selling and servicing
motor insurance policies. IRDAI has also
Motor Vehicle Insurance 1

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2 Motor Vehicle Insurance

CEO’s Corner Inside
6 Motor: Challenges on the road ahead
- Praveen Gupta FCII
Changing Dynamics of Indian Motor

9 Insurance Sector
- Rajiv Kumar
Issue Focus
14 Motor Insurance and Liability

Insurance in India
- Arvind R. Shenoy
18 Motor Insurance – a realistic view…

- Dhiraj Nath
46 In The Air
Uninsured two wheeler segment:
24 challenge and opportunity in Indian 47 Statistics- Non-life
insurance market Insurance
- George Pascal Osta
56 New Business Data

31 In God We Trust…
- Jacob K Thomas
Guidelines to the
61 contributors of the Journal
Amendments in Motor Vehicles Act and

37 Increase in Third Party Insurance
Premium
- Nirjhar Majumdar 62 Crossword Solutions
43 Auto-drive in a non-tariff zone

- Dr. N M Behera

M otor vehicles were introduced in India during the latter part of the 19th century
and Indian Motor Vehicles Act, 1914 was the first legislation to regulate their usage. It
was later replaced by the Motor Vehicles Act,1939. Consolidation of the previous
legislations on motor vehicle usage and road safety was its main purpose. India’s
population almost doubled from the 1930s into the 1980s putting pressure on the
transport sector and the policy makers, making them realize a need for a comprehensive
review of the MV Act,1939 to make it relevant to the needs of the changed times. Various
committees have taken into account factors like the changed transport technology,
pattern of passenger and freight movements, developments of road networks in the
country, etc to give final shape to the desired legislation. Various transport institutes,
bodies, state governments and the general public were consulted for opinion seeking. Finally, the Motor
Vehicles Act, 1988 was enacted.
However, with the arrival of the new millennium, the number of vehicles plying on roads and the number of
accidents that are occurring are on the rise. According to a report, about 400-410 people die every day
across India (1,46,000 deaths per annum) due to road accidents. This scenario is not desirable both for the
family which suffers and to the economic wellbeing of the nation. Not just that, such a scenario also taints the
image of India on the world scene. Motor Insurance tries to alleviate the suffering of these unfortunate
families by providing them with monetary relief. Motor Insurance is the largest segment of General Insurance
business in India in terms of premium collected per annum. It also has huge potential for becoming much
bigger given the fact that about 60 percent of the vehicles plying on Indian roads are uninsured. A philosopher
speaking on what freedom is, once remarked “Your freedom ends where my nose begins”. True to this saying,
Motor Third party insurance is made mandatory in India, because one cannot afford to harm others on
account of one’s own actions. The motor portfolio to reach its full potential has to address some of the
problems it is facing like Motor Third Party losses, increase in motor insurance premiums, fake third party
claims and the all-important high exclusion percentage of vehicles from the insurance domain. This edition
of the Journal brings to the fore such issues in the Motor sector and also plausible solutions to them. The
edition focuses on:
1 . Challenges and Opportunities in the Indian market in the Motor Insurance sector.
2. Changing dynamics of the Motor Insurance Sector in India.
3. The Motor Vehicles Act Amendment Bill, 2017 which, inter alia, tries to bring about more discipline
amongst the vehicle users.
4. A bird’s eye view of Motor Insurance in India, its present status, potential and reasons for various
lacunae in the sector and also plausible methods and means to address them.
5 . Various challenges faced by the Insurers and also the Insured in the motor sector, the reasons for these
challenges and the possible ways to fix them.
The issues and challenges that the Motor Insurance industry, the largest portfolio in the General Insurance
business in India, is facing must be holistically addressed to make it a sustainable and a well rendered sector.
Law of large numbers could come in handy here. One way of addressing the motor Third Party losses would
be by increasing the volume to its true potential.
Let us wish that India soon sees the day when Motor Insurance realizes its full potential and that the users of
the vehicles solicit motor insurance not as an obligation but as a duty with a sense of responsibility towards
one’s own safety and that of others.
- KGPL RAMADEVI

Motor Vehicle Insurance
5
CEOs Corner
Motor: Challenges on the
road ahead
Mr. Praveen Gupta believes that greater attention to the processes ex-
traneous to the insurers in the motor sector is the dire need of the hour
because ensuring driver discipline and increasing the efficiency and
transparency of these processes is fundamental to addressing the is-
sues of the portfolio.
- Praveen Gupta FCII
T he capping of Motor Third

Party Bodily Injury (TPBI)
complex with newer forms of
road mobility descending upon Motor must be seen as a
liability remains a wishful the same infrastructure. The part and parcel of our
thinking for most insurers. If growing prosperity will only roads which reflect the
and when in place will it really further segment the options. socio-economic reality. We
resolve all the barriers and Insurers need to anticipate how have multiple modes of
challenges in the path to the the mid-term will unfold in transportation, ranging
third party portfolio long-term. from animal driven to most
profitability? Are we in a time modern automobiles. At
Is capping the way
warp? Do we need to recognise the turn of the last century
forward?
motor in context of evolution of when all major brands
mobility and the attendant risks Just over two plus decades ago
were queuing up for India
as they unfold? Perhaps we the severity of Chan Pui Ki
entry, the big question was
need to evaluate this in the versus Kowloon Motor Bus
– where are the roads.
short to medium and medium Company Limited triggered a
Today they all co-exist.
to long term perspectives. legislation leading to the
This will only get more
capping of third party bodily
Motor must be seen as a part complex with newer forms
injury in the then British colony
and parcel of our roads which of road mobility
of Hong Kong. The build-up
reflect the socio-economic descending upon the same
was perceptible as the longevity
reality. We have multiple infrastructure.
of the residents, inflation and
modes of transportation, per capita income kept rising

w
ranging from animal driven to above those applicable in the
continues to threaten the cap
most modern automobiles. At UK. Two of the three Indian
applicable to the TPBI
the turn of the last century insurers with presence in HK
coverage for vehicle owners in
when all major brands were were compelled into a runoff
HK.
queuing up for India entry, the and shut shop, as an aftermath.
big question was – where are The debate on applying Given the developments across
the roads. Today they all co- multipliers in line with the many common law
exist. This will only get more recent trends in inflation jurisdictions, it would be no

different here as and when alleging their vehicles’
The fundamental problem
limited liability comes into play. emissions contributed
with mankind’s hundred
Disciplining the men behind significantly to global warming,
plus year old obsession with
the steering wheels, efficiency harmed the resources,
the motor car is that it is a
and transparency in the infrastructure and
mobile source of air
processes extraneous to insurers environmental health of
pollution, difficult although
- call for greater attention. California. It cost the State
not impossible, to pinpoint.
million of dollars to address
As the country embarks upon The pollution originates in
current and future effects.
ambitious mobility projects and both direct tailpipe
imminent high paced Vehicle emissions for long have emissions and in the
urbanisation, seamless mobility been recognised as the single mechanical wear of
should ideally call for seamless most rapidly growing source of different parts of the
risk treatment. A uniform carbon emissions contributing vehicle
‘’multimodal’’ cover rather than to global warming and known
w
a standalone Motor TP liability to be the origin of about half of
ought to be the need of the hour. the air pollution in the US. Bill concern for motor insurers
Even in today’s fragmented Lockyear was trying to hold getting drawn in sooner or later
environment, imagine the these companies responsible for arose from the fact that
variance in the passenger their contribution to this crisis. technology could possibly
liability when onboard a drop It did not succeed then. enable measuring individual
bus to the aircraft versus whilst car’s toxic contribution. Hence
Could Motor insurers
in a flight mode. Needless to the responsibility of each unit
become liable?
mention that we must at all could be quantifiable. It is only
times be vigilant against blind- Greenhouse effect is just one of
a matter of time that the stage
spots. The Motor Third Party a series of complications that
would be set beyond the
Pool was a rude shock in the our century plus old toy
greenhouse to health effects.
recent past. UK insurers and contributes to. Motor vehicles
reinsurers are currently dealing emit carbon monoxide (CO). If tobacco companies could be
with the Ogden rate changing. This is a colourless, odourless sued for negligence, how long
gas that causes serious, possibly can car producers avoid legal
Environment risks: fatal, health problems. Ninety action for impairing the overall
The fundamental problem with percent of CO in urban areas environment and human
mankind’s hundred plus year originates from cars. health? Has the threat from
old obsession with the motor car Hydrocarbon emissions have pollution charges for vehicles
is that it is a mobile source of serious health implications. So gone away? China has
air pollution, difficult although do nitrous oxides, volatile dethroned the US in terms of
not impossible, to pinpoint. The organic compounds, lead and number of cars sold per annum.
pollution originates in both particulate matters. It has completely transformed
direct tailpipe emissions and in the landscape there. The battle
Starting from eye irritation,
the mechanical wear of against smog goes on.
wheezing, asthma, cancer, acid
different parts of the vehicle. In However, the Chinese are
rain, ozone formation and the
2006 California’s Attorney rapidly moving towards electric
resulting greenhouse effect, the
General Bill Lockyear filed a cars. They have their own
evils of motor car emissions
lawsuit against leading US and version of Tesla. Given that Tort
constitute a horrendous list. The
Japanese car manufacturers, law is of only recent origin –

will we see any action like in cars in place but what is critical vehicle at Level 5. Whereby a
California? Indeed a question is a legislative framework to Light Detection and Ranging
mark. Could we see some action determine who is liable in the (LIDAR) would make it
in our own land? Perhaps, event of an accident with a happen. This would entail - an
thanks to the class action driverless car. AV friendly road infrastructure;
proviso under Companies Act Vehicle to Vehicle (V2V) and
In the UK for instance, while
rather than a pure motor cover. Vehicle to Infrastructure (V2I)
the insurers still need to figure
Activism against tobacco is wireless networking; a reliable
out the responsibility for an
already perceptible. protocol for road sharing with
accident – the government has
The Volkswagen defeat device proposed to extend compulsory unpredictable human drivers;
opened another front in many motor insurance requirements ability to pin the responsibility
jurisdictions – The US, Europe to include coverage for losses once an accident happens: on
and Australia in particular. Still where autonomous vehicle is at the AV owner; manufacturer,
developing, this is yet another fault. As a result, motor software supplier. And last but
manifestation for pinning down insurers will pay claims in the not the least, protecting an AV
auto pollution. Could first instance – irrespective of from cyber attack.
technology be able to pinpoint whose fault it is. Where the In conclusion:
damage by each and every vehicle is at fault, the insurer
The motor portfolio will witness
vehicle, indeed it is getting will then be able to recover
interplay of several dominant
closer – thereby potentially costs from liable
forces and undercurrents.
claimable under respective manufacturer.
Anyone managing it ought to
motor policy?
There ought to be a framework reconcile with the fact that
Mid to long-term: for insurers to be able to stability is the last thing they
Technology ahead of recover damages from vehicle should expect. The portfolio
regulation! manufacturers when the data could churn from a pure motor
The transition from catalytic confirms an accident is the fault to elements of casualty class. As
converters to hybrids and of driverless technology. the nucleus of auto industry
electric cars seems within sight. Without this, insurance migrates from Detroit to Silicon
Apart from the climate customers and shareholders Valley – metaphorically
degradation the implications could end up footing the bill for moving to a tectonically active
otherwise are not far reaching. the failings of other parties. terrestrial reality – it bodes
It is the self-driving technology David Powell of the Lloyd’s ongoing disruption. As one of
that could really bring about the Market Association (LMA) was the larger motor market, we
paradigm shift. “If they make recently quoted by Rebecca need to be prepared for all the
the world safer it’s going to be Hancock. potential ramifications. A
a very good thing, but it won’t recent IBM survey reveals that
The Economist resonates what 74% of Indians who responded
be a good thing for auto
could mid to long-term were in favour of autonomous

insurers”, believes Mr Warren translate into. “It could take a
Buffett. Being safer, as they are vehicles. The AVs could arrive
decade or two before AVs can on our roads sooner than we
expected to be, would bring transport people anywhere, at
down the overall economic cost might like to believe! Are we
any time, in any condition – ready?
of auto-related losses, thereby and do so more reliably and
driving down the premiums – safely than human drivers.” It
reports Business insider on - Praveen Gupta FCII
also articulates prerequisites for
concerns of Mr Buffett. Managing Director & CEO
a car to metamorphose from
Raheja QBE General
It is one thing to have driverless Level 0 to a fully autonomous
Insurance Co. Ltd.
CEOs Corner
Changing Dynamics of Indian
Motor Insurance Sector
Mr. Rajiv Kumar presses upon the need on the part of the insurers to
always maintain high future reserves to meet the high third party
claims. He also expresses hope that the Motor Vehicle Amendment Bill,
when it becomes an Act would bring about sanity and responsibility
amongst the vehicle drivers.
- Rajiv Kumar
I ndia has been seen as the the increase in road network is accidents being 4th largest
“Next Superpower in its only 39% as compared to the contributor of death in the age
Cocoon” waiting to reap the increase of 158% in numbers of group of 15-49 years which are
fruits of demographic dividend motor vehicles plying Indian the productive years of the
but the same demographic roads. Due to physical population. Also from the same
dividend is being curtailed by constraints, the growth of road study it is ascertained that
loss of lives at an average of 17 network will be muted but a between 1990 and 2013, the
lives every hour due to steady increase in vehicle count health loss due to road accidents
vehicular accidents every year. will lead to congestion of roads had increased many folds
The growing urbanisation and and fatalities. whereas there is a marked
rising disposable income have decrease in health loss due to
Table 1 shows the leading
pushed the increasing number infectious diseases.
causes of deaths and road
of motor vehicles. Since 2000,

Several other committees had
Towards the Motor
been set up to improve the road India has been seen as the
Vehicles (Amendment)
safety in the last 10 years and “Next Superpower in its
Bill, 2016
to bridge the gap between Cocoon” waiting to reap
Given the grim state of the road Indian and International Road the fruits of demographic
safety in India, the Ministry of and Vehicle Safety Standards dividend but the same
Road Transport and Highways such as Expert Committee demographic dividend is
appointed the Committee on Report under the being curtailed by loss of
Road Safety in 2007 under the Chairmanship of Mr S Sundar lives at an average of 17
Chairmanship of Mr. S. Sundar for the Review of the Motor lives every hour due to
to examine the magnitude of Vehicles Act, 1988, 12th Five vehicular accidents every
road traffic injuries and Year Plan sub-group on Road year.
fatalities. The committee Safety and Human Resource
recommended the setting up of Development (2011), and the
w
Central and State levels road National Transport
safety authorities to advice and Development Policy Committee
regulate the highly “fragmented Plugging various gaps in the
Report (2014).
and diffused” system from the Indian Motor Insurance
Given the gravity of various Sector
Central to the local levels - such
issues regarding road safety,
as municipal authorities, police, Even after internalising much
third party insurance,
transport department, of the modern information on
regulation of taxi aggregators,
stakeholders including motor vehicles and road safety
recall of unsafe vehicles, and
automobile and insurance to formulate several laws and
compensation for victims in
industry, members of civil reports as mentioned above, all
case of road accidents, in April
society, etc. The committee also possible attempts at reducing
2016, the central government
noted that adequate insurance the death rates have failed. The
constituted a group of state
cover was not available either Motor Vehicles (Amendment)
transport ministers under the
for the vehicle or the affected Bill, 2016 tries to address
Chairmanship of Mr. Yunus
party to cover the medical various plaguing issues in road
Khan (Minister for Transport,
expenses. In view of the same, safety and thus will have
Rajasthan) to recommend
the committee suggested for the bearing on Motor Insurance
reforms in road transport
establishment of an appropriate sector.
sector. The committee
fund and scheme to facilitate
recommended that Addressing the White
medical coverage to road
amendment to Motor Vehicles Spaces: Serving the

accident victims. In first of its
Act, 1988 is required on an uninsured
kind, the Sundar Committee
urgent basis. Thus, the Motor
also suggested that insurance One of the major issues is the
Vehicles (Amendment) Bill,
companies should link number of uninsured vehicles
2016 was introduced in Lok
insurance premium with the plying on the Indian roads. As
Sabha on August 9, 2016 by the
accident record of the driver in per the study by General
Minister of Road Transport and
order to provide an incentive for Insurance council of India in
Highways, Mr. Nitin Gadkari.
safe driving. 2015-2016, there were 190

million registered vehicles in and IIB (Insurance
India but only 82.6 million Information Bureau of India) Historically, Insurance
were insured, means that data regarding registered companies are reeling due
around 56% of the registered vehicles with the Police to very high third party
vehicles are not insured. This authorities will help in issuing
claims ratio and given the
directly affect on one hand the of E-Challan as in the case of
mandatory nature of the
victim by denying him the Cyberabad. The Bill also
policy, there is hardly any
required compensation as the empowers the Central
options for the insurers but
most often than not the accused government to increase the
to keep paying up and
will be uninsured and on the fines by up to 10 percent every
other hand put the accused year if it feels the necessity. maintaining a high future
under huge financial burden if reserves under both IBNR
Step to bring down the
he fails to slip from the clutches (Incurred but Not
Exorbitant Third Party
of judicial process. The Motor Reported) and IBNER
Claims Ratio
Vehicles (Amendment) Bill, (Incurred But Not Enough
2016 has put forth various Historically, Insurance Reported) provisions.
amendments which will companies are reeling due to These provisioning has an
provide the required impetus to very high third party claims adverse impact on the
the Motor Insurance sector by ratio and given the mandatory insurers’ balance sheet.
bringing more uninsured nature of the policy, there is
vehicles under the insurance hardly any options for the w
coverage. Increasing the insurers but to keep paying up
penalties for non-conformity and maintaining a high future It can be seen from the figure 1
with the Act will encourage reserves under both IBNR that historically the Gross and
more vehicles to take insurance. (Incurred but Not Reported) Net Incurred Claims ratio for
This in addition with the use of and IBNER (Incurred But Not Motor Third Party has been
electronic services to improve Enough Reported) provisions. consistently above 100%
road safety monitoring across These provisioning has an putting much stress on the
India and sharing of RTA adverse impact on the insurers’ profitability of Insurers. The
(Road Transport Authority) balance sheet. Claims experience shows a

lower Third party rate against agencies on the manufacturing defective vehicle with another
the claims outgo experience due standards as set by the similar or vehicle with better
to severity of the accidents and guidelines. The recall can be specifications.
increasing compensation initiated on the following
The bill also provides for a
awards by the courts for the defects:
penalty of a fine of up to Rs. 100
accident victims.
i. Defects having adverse crore, or imprisonment of up to
The Motor Vehicles impact on the environment one year, or both if
(Amendment) Bill, 2016 has manufacturer is found of non-
ii. Defects having adverse
recommended for the capping compliance with
impact on the driver
of maximum liability for Third manufacturing or maintenance
party insurance at Rs 10 lakh iii. Defects having adverse of standards of motor vehicles.
for death victims and Rs 5 lakh impact on the other road
The provisions will certainly
for grievous injury, but the bill users
boost the Product Liability
passed by Lok Sabha has iv. Defects reported to the market for the General
removed any such cap to clear Government by the Insurers as more and more
the uncertainty on the authorised testing agencies manufacturers will now opt for
responsibility of paying of the
Strict guidelines have been set a risk protection against these
balance compensation amount.
by the Bill for the recalls.
But a major win for insurers
came from the fixing of time manufacturers to reimburse the Establishment of New
limit of six months for owners of the recalled vehicles Central Fund for all road
application of compensation to by reimbursing the full costs of accidents
the Tribunal for road accidents. the vehicle or by replacing the
The Bill also laid down guidelines
Previously there existed no time for the establishment of Motor
limit of the application of Vehicle Accident Fund which
claims. This will surely help The Motor Vehicles
will be utilised for treatment of
insurers to optimise their (Amendment) Bill, 2016
injured persons in the golden
IBNR/IBNER provisions based has recommended for the
hours and compensation for
on the claims application. capping of maximum
accident victims with the
liability for Third party
Recall of defective motor payment of funds through
insurance at Rs 10 lakh for
vehicles: emerging market grant or loan from central
death victims and Rs 5 lakh
for Product Liability government or through the
for grievous injury, but the
Insurance balance of Solatium Fund
bill passed by Lok Sabha

which is managed by General
The Amendment Bill provides a has removed any such cap
Insurance Corporation through
provision for the Central to clear the uncertainty on
the premiums earned from
government to order a recall for the responsibility of paying
various insurance businesses.
all such motor vehicles which of the balance compen-
Given the nature of this new
are found defective by the sation amount.
Motor Vehicle Accident Fund, it
authorised testing centres and w may supersede the Solatium

Fund or a new source can be motor vehicles registered in
identified by the Central The Success of the Motor India, Statistical Yearbook
government to provide credit to Vehicles (Amendment) of India 2016, Ministry of
this fund which may come Bill, 2017 will depend on Statistics and Programme
from insurance. the implementation of the Implementation.
same as enforcement of
Conclusion: iv The National Road Safety
the law plays a very vital
and Traffic Management
The Motor Vehicles role. It has been found in
Bill 2010, July 27, 2010,
(Amendment) Bill, 2017, as a study that a vigilant
passed by Lok Sabha will enforcement of the http://www.prsindia.org/
certainly bring some sanity provisions included in the uploads/media/
among the vehicle drivers as the Motor Vehicle Act (1988) Road%20safety/SCR%20
penalties have been increased would reduce the death National%20Road%20Safety%
around five times for non- rates by more than a third. 20and%20Traffic%20
conformity with law. It will also w Management%20Board%20
help in increasing the insurance Bill%202010.pdf
cover to uninsured vehicles enforcement of the provisions
through its focus on increasing included in the Motor Vehicle Rajiv Kumar
e-governance across the system Act (1988) would reduce death MD & CEO
and thus sharing of various silos rates by more than a third. Universal Sompo General
database across RTAs, IIB and Insurance Co. Ltd.
End Notes:
Police authority. The bill also
provide for a National Road i Road Accidents in India
Safety Board to advice Central 2015, Ministry of Road
and State governments on the Transport and Highways,
aspects of traffic management May 2015, http://morth.
and road safety through nic.in/showfile.asp?
formulation of standards across lid=2143
safety and technology. This will
ii “Volume 3, Chapter 2,
also help in reduction of road
Roads and Road
accidents thus lesser burden on
Transport”, India Transport
Insurers in terms of Third Party
Report: Moving India to
Claims.
2032, National Transport
The Success of the Motor Development Policy

Vehicles (Amendment) Bill, Committee, June 17, 2014,
2017 will depend on the http://planning commis
implementation of the same as sion. nic.in/sectors/NTDPC
enforcement of the law plays a /volume3_p1/roads_v3
very vital role. It has been found _p1.pdf
in a study that vigilant
iii Table No 20.1: Number of

Issue Focus
Motor Insurance and

Liability Insurance in India
Mr. Aravind Shenoy presents the current scenario of Motor Insurance
in India, bringing to fore the various lacunae facing the sector, the
reasons for such gaps and the efforts made by the governments from
time to time to fill them. He vouches for a strict penalty regime and
responsible stakeholders to make the sector a well rendered one.
ARVIND R. SHENOY
T he Motor Vehicles Act, MV Act, 1939 was improved used to pay claims of over Rs.
1939 (MV Act, 1939) was upon and replaced by Motor 300 for every Rs. 100 it got as
mandated to provide relief to Vehicles Act, 1988. The Act had premium. With competition
Third Parties who meet with some new features like no fault and solvency margins falling,
road-accidents caused by a liability and amount entitled to lot of controls were put in place
negligent Motor vehicle driver. be claimed was modified to ‘as to better manage this
For the injury so caused, the incurred’. The hit and run cases portfolio. Further, after years
victim or the family in case of got coded in the form of The of persuasion, the Insurance
death could file a claim before Solatium Fund Act, 1989. Regulatory Authority of India
specially formed courts called (IRDAI) accepted the industry
The Motor Third Party
Motor Accident Claims demand of the need to increase
insurance business has been a
Tribunals (MACT). The claim the TP Premiums. While the
loss-making portfolio for the
was decided as per specified IRDAI does not accede to the
past many decades for the
limits based on whether the industry’s demand for desired
general insurance industry.
person was a passenger of a increase, it does a tight rope
Not very long ago the industry
vehicle or a pedestrian, etc. walk to ensure that various
and on income and age and/ stakeholders especially the
While the IRDAI does
or disability. In 1982, the MV Transporters’ bodies and the
not accede to the industry’s
Act, 1939 introduced a demand for desired increase ordinary vehicle owners are
nominal fixed compensation in in premium, it does a tight not inconvenienced by a
case of a hit and run accident rope walk to ensure that all sudden increase. The industry
where the vehicle number was the various stakeholders continues to have higher
not noted by the victim or the especially the Transporters MACT awards and outgo but
bodies and the ordinary
eyewitnesses and it remained the small relief of revision in
vehicle owners are not
unidentified. Such claims had premium and better systems
inconvenienced by a sudden
to be filed before the Tehsildar/ increase. in place to check frauds
Collector/District Magistrate w among other measures has
and not in MACT. In 1988. the helped the industry to a stage

victims without the
year, the need is not only to
rigors of protracted
According to the Ministry reduce the incidence of
of Road Transport and litigation?
accidents and fatality but also
Highways (MoRTH), in the 8. How the increasing
to provide faster relief by
year 2015, over 5 lakh
reducing the burden on courts. value of awards due to
accidents were reported of
increased incomes do
which 1.46 lakh were killed The Governments have found
and over 5 lakh persons it imperative to revisit the MV not result in
injured. Road accidents u n a f f o r d a b l e
Act, 1988. The challenges were:
have taken the maximum premiums by vehicle
toll as compared to any 1. How to prevent or owners?
other causes even say reduce road accidents?
malaria. Most reports have 9. How to ensure that
suggested that India has 2. How to ensure discipline Insurers could
the maximum number of on roads by all road determine their liability
deaths due to road users and make roads and offer relief to
accidents in the world. safe for all? victims/families
w 3. How to ensure quickly so that
immediate medical avoidable litigation can
where the losses are bearable
treatment and attention be done away with?
with the profits it makes in some
other lines of businesses. to road accident Hopefully, the Motor Vehicles
victims? (Amendment) Bill, 2017 does
According to the Ministry of
4. How to ensure quick seek to address these
Road Transport and Highways
relief to victims/victims’ challenges. The Bill is currently
(MoRTH), in the year 2015,
families without the passed by the Lok Sabha and
over 5 lakh accidents were
hassle of seemingly pending in the Rajya Sabha.
reported in which 1.46 lakh
were killed and over 5 lakh unending adjudication? There is a general tendency to
persons injured. Road accidents 5. How to ensure that start late from home and then
have taken the maximum toll some relief is also try to cut through the traffic
as compared to any other secured by those where irrespective of traffic
causes even say malaria. Most they don’t have to run regulations to reach the
reports have suggested that after owners to get relief destination in time. This
India has the maximum where Insurers have no tendency adds to the chaos on
number of deaths due to road liability and the accident the road as thousands attempt
accidents in the world.The causing vehicles were to rush and violate traffic laws
industry settled between 4.5 and uninsured? by justifying that it was okay
5 lakh claims each year in the to do so. We thus fail in our
6. How to get adequate
last three years. The backlog of obligations to other road users.
relief in case of Hit and
claims still pending in various For instance, say vehicles have
Run accidents caused by
MACTs is a matter of concern stopped at a red-light signal at
unidentified vehicles?
as it is adding to the overall a cross road. The signal for
liability. With nearly 5 lakh 7. How some immediate pedestrians to cross is on and
claims being reported every relief could be secured to if there appears to be no

pedestrian there, some tend to violations and strict
pass through justifying it enforcement of law. This will
though they know it is wrong. serve the dual purpose of If the accidents are to
Per chance, a pedestrian who enforcing discipline for more decrease there is need for
was not visible suddenly may responsible use of the road stricter penalties to curb
emerge or another vehicle thereby making our roads safer violations and strict
may also decide to pass and reduce incidence of enforcement of the law.
thinking all other vehicles accidents. This will serve the dual
would still be waiting for the By amending crucial provisions purpose of enforcing
light to turn green. In such on penalties by hiking them discipline for more
instances, the vehicle steeply would deter negligent responsible use of the road
bypassing the red light might use of roads, penal regulations thereby making our roads
hit the pedestrian or another for manufacturers of faulty safer and reduce incidence
vehicle and then blame the vehicles; wearing of helmets of accidents.
pedestrian or other vehicle. even by pillion riders,
It is often seen how cars and improving road infrastructure
w
motorcycles just horn and among others would make our disablement caused by the
immediately maneuver in roads safer. These are welcome accident (in case of non-fatal
front of a truck without leaving changes. accident) or the number/age or
adequate time and space for income of dependents of the
The Good Samaritan clause in
the truck to slow down and the victims (in case of fatal
the Bill would gradually
resultant accident is always accident). This is not all that
embolden the citizens to come
blamed on the truck driver. simple as satisfactory proof in
forward to the rescue of injured
Motor cycles and cars have respect of each of these must be
victims who need immediate
power steering and power submitted and proved.
medical attention during the
brakes and can stop the bike or Moreover, extent of any
golden hour. The Bill also seeks
car immediately while this contributory negligence must be
to take care of the treatment
advantage is not yet available considered because to the extent
during the golden hour till the
in trucks. Such situations are of negligence of the victim he/
victim stabilizes. This coupled
faced umpteen number of his family is not entitled to
with the fact that Trauma
times by a truck driver in a compensation. This thus
centers are planned to be set up
long-haul trip. It makes him becomes an arduous process of
at various places along the
irritated and frustrated but this litigation.
highways will bring immediate
challenge of road users not succor and treatment to the One way of overcoming this is
caring for the truck driver is injured individuals and in to have a fixed compensation.
something that he is expected saving precious lives. If not to have a combination of
as fait accompli he must live fixed compensation for those up
The compensation to a victim
with. to a particular income and age.
of a road accident depends on
If the accidents are to decrease For those having higher income
case of injury, on the income,
there is a need for stricter to be considered on a set
age and extent of medical
penalties to curb traffic formula.
expenses, permanent

In order that the compensation the increase would be too
is easy to understand and The direct claim negligible to be felt by vehicle
victim or victim’s family does negotiation with the insurer owners. As experience develops
not have to run after owners, can save claimants from the for the insurer there could be
advocates and courts, all the rigors of protracted considerable saving in the time
accident reports (FIR and other litigation. The amount taken for settlement of claims.
documents) be immediately should directly get
All stakeholders must ensure
(not later than 6 months) sent credited to the victims /
that a simpler and faster
to the Insurer concerned by the complainants / Bank
remedy is available to victims
Police. The victims or victim’s accounts. Since the
of road accidents and that the
family be then mandated to negotiation is directly with
roads become safe and road
approach the Insurer directly the insurer and faster, this
users more responsible. With
and lodge a claim. The Insurer would translate into
driverless and electric cars and
should within specified time reduction in the expenses
buses and hyperloop as the
arrange for due investigation and the saving in interest
future, one can only look
and work out the amount for the insurer.
forward to a new India with
payable if it is satisfied that the w clean roads, faster and
liability is certain. Insurers
disciplined movement of traffic
should have one to one treatment too should save lives
whereby accidents may
interaction with the and help accident victims
become very rare.
claimant(s) and based on the without their having to arrange
requisite documents make offer for funds for treatment. In cases Arvind R. Shenoy
Retired Chief Manager , New
to the claimant(s). In case of where insurers have a defense India Assurance Co. Ltd.
disagreements or refusal by the and are not liable to pay, the
Insurer the victim or victim’s Fund would release
family could take recourse to compensation to the victims.
MACT. This will reduce a large
The direct claim negotiation
burden of such cases on the
with the insurer can save
courts and to deal with the cases
claimants from the rigors of
that come to them much
protracted litigation. The
faster.
amount should directly get
In the bill, there is a welcome credited to the victims/
proviso of interim complainants/ Bank
compensation out of a specific accounts.Since the negotiation
fund for this purpose to protect is directly with the insurer and
the victims.The compensation faster,this would translate into
for Hit and Run cases too are reduction in the expenses and
hiked to Rs. 2 lakh in the event saving in interest for the
of death and Rs. 50 thousand insurer. This would in due
to those with grievous hurt. The course make the insurance
proviso of golden hour premium more affordable or

Issue Focus
Motor Insurance –
a realistic view…
Mr. Dhiraj Nath identifies the causes for low penetration of General
Insurance in India and what could be done by the industry to increase
the same. He also presents the current scenario of the Motor Insurance
sector in India with an empirical analysis and tries to present a realistic
picture of the sector as a whole.
- Dhiraj Nath
Motor Insurance – a analysis of claims for USA is penetration are many. Some of
realistic view… also given, to identify the root them are as follows:
-Abstract:Insurance cause and subsequently reduce Ø Health insurance activity is
penetration in India is very low the number of claims. Apart comparatively low in our
compared to world average from these three specific country than the developed
even after 16 years of opening suggestions are given at the end countries. Total premium
up of insurance sector through which the portfolio of collected is about 20
specifically in case of General motor insurance can be made thousand Crore where as
Insurance. Health, fire & profitable. the market potential is
consequential loss and property _
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_ much more than that.
insurance are the main areas Insurance Penetration is an
where there is a huge untapped internationally accepted
market. In spite of Motor measure of insurance spread in The penetration
Vehicle insurance being percentage is the
any country and it is the
internationally accepted
compulsory, only 35% of calculated as the ratio of measure of insurance
vehicles are insured which is premium underwritten in a development in any
one of the causes of loss to the particular year to the GDP of country and it is calculated
insurer (supported by incurred the concerned country. The as the percentage its
claim ratio statistics). In this current level of insurance premium to the GDP for
article, motor insurance the concerned country. In
penetration in India is 3.44%
scenario in India is discussed 2015 the insurance

of which general insurance penetration in India is
with probable causes of such penetration is only 3.44% of which general
high percentage of uninsured 0.72%.These levels of insurance penetration is
vehicles. Trend of increase in penetration are well below the only 0.72%.These levels of
premium per car is also given. world average specifically for penetration are well below
A brief description on General Insurance where the the world average
calculation of Motor TP specifically for General
world average is 2.77%. The
Insurance where the world
premium is given for ready reasons behind this low average is 2.77%.
reference. A reason wise w
Ø Property insurance is not so market segment. However, for
should go up to a whopping
popular in India and as a motor insurance, it is difficult
Rs.3.86 lakh Crore or 4-fold
result a huge segment has to increase the premium level
increase from current level. Our
remained untapped. Same is as it is associated with the sale
GDP is also growing at 6-7.5%
the case for fire and of Motor Vehicles.
every year. Hence the projected
consequential loss figure of Rs.3.86 lakh crore will Motor insurance is mainly of
insurance. also go up correspondingly. To two types viz. Motor Own
Ø Insurance for new vehicle is achieve the desired penetration Damage (MOD) and Third
invariably bought while level in a horizon of ten years Party Liability or Motor Third
purchase, but renewal the general insurance industry Party (MTP). MOD insurance
insurance rate is very low. should reach Rs.6 lakh Crore gives protection to the vehicle
premium (assuming the GDP owner against damages to his/
Ø Travel insurance is another
growth of 6.5% per annum). her vehicle and the Sum
segment which has been
For that the industry should Insured under a
remain mostly untapped.
have to achieve at least 21% MODInsurance policy reflects
The initiative of travel
growth in coming 10 years. In the value of the motor vehicle
insurance for reserved rail
2010-11 and 2011-12 the determined based on the
passenger is a promising
industry has achieved a growth concept known as Insured’s
step by the government.
of 23%. Hence it is not Declared Value (IDV). IDV is
Even for air travel also the
impossible. the value arrived at based on
insurance is optional.
the Manufacturer’s present
The total premium collected Among the above
value and depreciation based on
in India by Non-Life sector is mentioned factors, the
the age of the Vehicle.
Rs.96379 Crore in financial premium underwritten for
health insurance, property The MTP insurance
year 2015-16. To reach Global
insurance and other segments pays for any Third Party
penetration levels, the premium
can be increased by capturing Liability determined as per law
the untapped and unexplored against the owner of the
The MTP insurance
pays for any Third Party
Liability determined as per
law against the owner of the
vehicle. MTP Insurance is
a statutory requirement.
The owner of the vehicle is
legally liable for any injury
or damage to third party
life or property caused by

or arising out of the use of
the vehicle in a public place.
Driving a motor vehicle
without insurance in a
public place is a punishable vehicle. MTP Insurance is a statutory requirement. The owner
offence in terms of the of the vehicle is legally liable for any injury or damage to third
Motor Vehicles Act, 1988. party life or property caused by or arising out of the use of the
w
vehicle in a public place. Driving a motor vehicle without insurance in a public place is a punishable
offence as per the Motor Vehicles Act, 1988.
Motor insurance premium accounts for about 44% of the total General Insurance premium.
When the vehicle is new, people take both MOD and MTP insurance covers (generally termed as
Comprehensive Cover) so as to cover any damage to the new car as well as warranty requirements.
Table 1: Premium rates applied on Tata Indica for 2017-18 taken from
United India Insurance Company’s online calculator.
Policies Available Package Policy Liability Only Policy
IDV 424708
Premium in Rs. (Excluding Service Tax) 9835.0 2863
However, when the car Damage premium collection given below is obtained from
becomes old and moves out of has been growing more or less United India Insurance
warranty, people skip the MOD at a same pace. Company’s premium
insurance and continue with Needless to say that MOD calculator. Premium
the statutory requirement of premium would have been mentioned under package
MTP only cover. Even it has much more if all the vehicles policy consists of both MTP and
been seen that some vehicles were insured with both the MOD premium.
are not insured at all after the covers.For example, for a Tata The motor insurance
warrantee period is over. This Indica with anIDVof Rs.4.2 portfolio of insurers generally
fact can be substantiated with lakh, the MTP premium is suffers loss on its total business
the following chart where we approximately 1/3 rd of the due to skipping of the MOD
can see that Motor TP and Own MOD premium. The quotation insurance (which generates
Table 2: Comparison of vehicles that are insured to the uninsured
All figures in lakh 2011-12 2012-13 2013-14 2014-15
Registered motor vehicles 1595 1825 2100 2305
Insured for TP only 216 238 144 220
Insured for MOD package 425 503 551 603
Total vehicles insured 641 741 695 823
No of Vehicles uninsured 954 1084 1405 1482
Percentage 59.84% 59.39% 66.93% 64.30%
Vehicles without MOD Insurance 1170 1322 1549 1702

Percentage 73.35% 72.45% 73.78% 73.85%
more revenue for the insurer) by car owner. For Third Party Liability insurance the insurer charges
a notional premium as declared by IRDAI time to time. Still, the total claim amount is exceeding
the expected claim size. Hence the motor third party premium has been increasing continuously
(inflation index is also a component while fixing Motor TP premium).

Table 3: Comparison of change in average premium per vehicle over the years
Premium in Crores (Rs.) 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15
Motor Own Damage 9486 12036 14078 19595 17768 18019
Motor Third Party 5857 6139 9729 10094 15873 19547
Premium per vehicle 683.65 753.99 795.36 730.96 716.52 788.85
premium/ vehicle own damage 742.53 848.40 882.68 1074.04 846.10 781.84
Registered motor vehicle (in 000) 127746 141866 159491 182445 210000 230470
Grand Total (of all lines of business) 38469 47019 57962 68719 77403 84685
Even after the statutory requirement of MTP insurance, P(t) = C1(t) x CII (t-1)
around 65% of the vehicles are uninsured. From Table-2 we could + C2(t) where
see that only a little above 26% of vehicles are insured with MOD P(t) is the motor TP
policies which comes with premium applicable to the
financial year ‘t’,
CII (t-1) is the cost of
inflation index for the year ‘t-1’
as notified by the CBDT, and
C1(t) & C2(t) are the
parameters applicable to the
financial year ‘t’ whose values
shall be determined and notified
by IRDAI in each financial year
based on the experience
If we add another 15-20% as operating expenses, then the total measured in terms of average
expenses go beyond 100% of premium income. Hence it is clear claim amounts, frequency and
from the above all the companies have been making losses on expenses involved in servicing
their motor insurance portfolio and as a consequence motor the motor TP business. The
insurance premium is going up. value of the parameters C1 (t)
For MTP insurance, insurers have nothing to do as IRDAI & C2 (t) may vary according to
decides the premium.The premium is calculated as the class of vehicle.Some of the
motor TP premiums for the
current and last financial year
are given below to compare the

changes.
package policy. Needless to
add that earlier the commission
rates for MTP policies were NIL
(for MOD policies it is 10%)
which worked as a disincentive
to the agent for doing third
party only policy.

Elimination of causes of accident can directly reduce the claim but that is not under control
of insurers. There are mainly two factors that cause most of the accidents viz. mentality of people
and non-stringent implementation of rules and regulations imposed by government.
The following table shows the cause of road accidents in the US for the year 2015. Table-5
captures the types of accidents and Table-6 tells about the real causeof accidents.
Table 4: Sample of Motor TP premium changes in current year over last year
Type of car Premium Premium Revised Premium

for 2016-17 (Rs.) for 2017-18(Rs.) for 2017-18 (Rs.)
Two wheelers between 75cc & 150cc 619 720 720
Private car between 1000cc & 1500cc 2237 3132 2863
Private car exceeding 1500cc 6164 8630 7890
Goods Vehicle Weight 7500kg to12000kg 15365 21511 19667
Single vehicle event which accounts for 32% of accidents, causes due to hitting with
something, skidding, turn upside down while turning, internal failure of the car, etc. Other than
pure accidents, all other accidents are linked to the driver which accounts for 94% of total accidents.
The following table tells us this fact.
The other causes mentioned in table 5 are mainly due to breaking of traffic rules. These
types of accidents may be reduced by imposing stringent traffic rule by the Govt. like very high
Table 5: Classification of Road Accidents in US for the year 2015 as per type of accidents
Crash Configuration Number of Crashes Percentage
Single-vehicle events 7,13,272 32.60%

Change trafficway, vehicle turning 5,84,775 26.70%
Same trafficway, same direction 4,58,018 20.90%
Intersecting straight paths 2,61,410 11.90%
Same trafficway, opposite direction 1,19,948 5.50%
Miscellaneous (U-turn, etc.) 51,742 2.40%
Total 21,89,166 100%
penalty for breaking rules, agents to increase the motor

this is not in control of the
breaking signal, driving insurance premium by the
insurer. Though there is a
without licence, lane driving, following way:
clause that no claim to be paid
one way driving rule violation, Ø Commission rates may be

if the accident is due to any
over speeding, not taking modified in such a way that
violation of rule, proving each
proper precaution (helmet, they increase gradually with
and every accident for such
seat belt, drunken driving) etc. renewal insurance. This will
probable rule violations is not
In this way the possible or feasible. encourage the
number of accidents will intermediaries to go for
Insurer cannot control
reduce and consequently the renewal. It would also be
the car owner but they can
number of claims. However, easy to collect renewal as
impose conditions on their
the customer is known to

Table 6: Classification of road accident in US for the year https://portal.uiic.in/
2015 as per cause of accidents
polclaimmotor/
Causes of accident Number Percentage cust_NewMotorPolicy
Drivers 20,46,000 94% ±2.2% SecondAction.do?btnValue=plan
Vehicles 44,000 2% ±0.7% https://

crashstats.nhtsa.dot.gov/
Environment 52,000 2% ±1.3%
Api/Public/ViewPublication/
Unknown Critical Reasons 47,000 2% ±1.4%
812115
Total 21,89,000 100%
https://data.gov.in/catalog/
total-number-registered-
them and little or no from financial benefits. They
canvassing is needed. motor-vehicles-india
will not let it go so easily and as
Ø When a car is not renewed a consequence the premium https://www.irdai.gov.in/
for insurance, it may be will definitely go up. In due ADMINCMS/cms/
treated as lapse like that of course the motor insurance frmGeneral_List.aspx?
life insurance and may be portfolio of insurers will come
DF=Creport&mid=11.2
linked with curtailment of out of the red and gradually
http://www.knowindia.net/
club membership and other become profitable.
benefits of the agent. auto.html
Website and other
The two factors mentioned will References: https://www.irdai.gov.in/
have two beneficial effects. On Motor Vehicles Act 1988, Govt. ADMINCMS/cms/
one hand they would increase of India rmGeneral_Layout.aspx?
the motor premium and on the page=PageNo359&flag=1&
Handbook on Motor Insurance,
other hand they would increase
published by IRDAI mid=IRDA+Journal
the commission income of the
Circulars issued by IRDAI on Dhiraj Kr Nath
agents. Club membership
MTP premium rates for 2016- OSD, R&D Section, SDD, IRDAI
benefits are of huge honour and
17 and 2017-18 Dhiraj.nath@irda.gov.in
prestige to the agents apart

Issue Focus
Uninsured two wheeler segment:
challenge and opportunity in
Indian insurance market
Mr.George Pascal points out the reasons for the high exclusion of the
two wheeler segment and the plausible solutions. The vital role that
could be played by all stakeholders in this excluded segment including
technology, customer sensitization and coordination between various
agencies is brought out.
I ntroduction two-wheelers plying on Indian

roads are uninsured4. Thus, the According to
Motor insurance is the General Insurance Council
challenge in the general
largest portfolio of general of India, 60% of vehicles
insurance market is high
insurance business in India plying on Indian roads in
exclusion in its largest portfolio.
with a share of 43.89% and 2015-16 were uninsured3.
growth rate of 13.17% in 2015- Uninsured two-wheeler Most of the uninsured
161. In terms of actual volume, segment vehicles are two-wheelers
the premium underwritten in and 75% of the total two-
From Annexure-A we wheelers plying on Indian
2015-16 stood at Rs. 42301
see that the estimated loss in roads are uninsured 4 .
crore 2 . If we consider the
third party premium (TPP) Thus, the challenge in the
insurance penetration of
income, from uninsured two- general insurance market
general insurance business in is high exclusion in its
wheelers, in the year 2015-16
India, it is 0.72% out of which largest portfolio.
was Rs. 5,641 crores. If the
around 0.32% is due to motor w
uninsured rate of 75%
insurance business.
continues in this segment, then
From the above data it in 2024-25 the potential income will be around Rs.
is seen that motor insurance is estimated loss of this premium 52,100 crores. Post adjustment
one of the developed portfolios Chart-A
of general insurance. However,
this is just part of the picture of
this segment in India. On the

other hand according to
General Insurance Council of
India, 60% of vehicles plying on
Indian roads in 2015-16 were
uninsured 3. Most of the
uninsured vehicles are two-
wheelers and 75% of the total

for inflation of 5%, this comes to around 80% of the entire motor to renew 8 two-wheelers to earn
insurance portfolio of 2015-16. The overall loss in premium is similar volume of premium
much more if we account premium for own damage cover also. earned by renewing one car.
Estimated loss as per Annexure-A for three scenarios of Thus, output to effort ratio in
uninsured rate of 30%, 50% and 75% is given in Chart-A. this segment is very low and
unattractive for insurers or
So, when an industry foregoes the opportunity to tap 15%
distributors.
of its current market, that to which is captive, we may jump to
a conclusion that it is unprofitable. However, the ICR for Third 2) Distribution channel
Party (TP) Insurance of two-wheeler is the lowest among all plays an important role in
classes of vehicles and was 63.37% for the year 2012-135. It is renewal of business. Most of the
not more than 68% for any of the years between 2009-10 and new two-wheelers sold are
Chart-B insured through intermediaries
who are tied to the two-wheeler
showroom. After one or two
years most owners are not in
touch with these showrooms as
they go to local garages for
servicing etc. For renewals after
one year not much effort is
made by these distributors as
they are happy with the captive
and higher ticket size insurance
When an industry
foregoes the opportunity to
2012-136 (Chart-B). In general market. tap 15% of its current
insurance Incurred Claims market, that to which is
Supply side issues:
Ratio (ICR) gives a fair captive, we may jump to a
indicator about profitability of 1) The ticket size conclusion that it is
a line of business. Thus, (premium per policy) of two- unprofitable. However, the
concluding that two-wheeler wheeler for comprehensive as ICR for Third Party (TP)
insurance even “act only” is well as TP insurance is Insurance of two-wheeler
draining or unprofitable is quite comparatively small. The is the lowest among all
not supported with data median premium for classes of vehicles and was
available. “mandatory insurance” of two- 63.37% for the year 2012-
wheeler is only Rs. 804/- 7 .
Then why is a large chunk 135. It is not more than 68%

Thus, it requires greater effort for any of the years
of two-wheeler segment
to earn same volume of between 2009-10 and 2012-
uninsured?
premium compared with other 13 6 (Chart-B). In general
To understand “why” class of vehicles like cars etc. insurance, ICR gives a fair
let us look into issues of E.g. If we take the highest indicator about
“demand” as well “supply” side premium of “act only” profitability of a line of
of two-wheeler insurance insurance, an insurer will have business.
w
sold to people buying new I tried to validate my
The main reason for assumption of high self
vehicles.
low demand in two-wheeler insurance by collecting data of
3) The other option left for segment is thus not low traffic violation or fines levied
handling renewal of this low level of awareness but habit for various offences, but I failed
ticket segment is the online of “self-insurance”. The to find the relevant data in
distribution channel because of reason for avoiding even public domain. On searching
cost efficiency. People generally mandatory insurance is the internet for information on
nowadays search for that the perceived expected self insurance in two-wheeler
competitive price of any outgo in terms of paying segment, I came across a web
product or services through fines for driving without page at http://www.team-
web aggregators. On visiting insurance is lesser than the bhp.com/forum/indian-car-
the websites of insurance premium for mandatory loans-insurance/161306-
aggregators, it is surprising to insurance. insurance-premiums-vs-
note that most of them offer w claims-would-self-insurance-
quotes for comprehensive two- cheaper-you.html. Here, in a
wheeler insurance but not for poll titled “Your equation with
insurance. Such perception
mandatory insurance. Even car insurance” out of 102
arises mainly from the
where some offer quotes for TP respondents 72.55% voted as
following facts:
insurance it is only from very “Yes, self-insurance would be
limited (say only one or two) a) Dismal implementation cheaper. But I’ll buy
participating insurers. The of traffic rules resulting comprehensive coverage
reason for this could be that in very low probability anyway”, while 17.65% voted as
either most insurers do not of being caught and “Yes, self-insurance would be
want their TP insurance to fined for any traffic cheaper. I’ll consider it (or am
cannibalise the comprehensive violation including already on it)”. Though not
product or it is lucrative for the driving without scientific and conclusive
web aggregators to push insurance. enough, yet it gives some
comprehensive than TP only indication of existence of high
insurance. b) High level of corruption degree of inclination towards
leading to bribes of self insurance in motor
Demand side issues: amount much lower insurance. In contrast to cars
than the fine thus the Insured Declared Value
Self insurance:
reducing expected outgo (IDV) of two-wheeler segment
Generally low level of
even when caught. is very small. Thus, the need for
awareness among retail
segment is the main cause for c) Clubbing of expected comprehensive insurance in
low demand for insurance. outgo for being caught two-wheeler segment is far less
However, awareness level is for other traffic offences due to which the risk taking
quite high in motor insurance (like driving without behaviour gets encouraged
as all new vehicles are sold with helmet, triple load, no leading to self insurance.
insurance. The main reason for pollution clearance Who and how to bell the
low demand in two-wheeler certificate etc.) along cat?

segment is thus not low level of with no insurance.
awareness but habit of “self- Hence, the owner From the basic
insurance”. The reason for perceives it better not to understanding of the challenge
avoiding even mandatory pay for insurance and we move to the next important
insurance is that the perceived take a gamble and use question as “how to overcome
expected outgo in terms of this money if required to this challenge”. The major
paying fines for driving without pay fine or bribe on players who can contribute
insurance is lesser than the being caught for any their part to address the
premium for mandatory traffic offence. challenge are (a) law

enforcement agencies (mainly mobile number etc. for insurance certificates produced
traffic police) (b) regulator (c) communication of traffic by some to avoid penalty.
insurers (d) others like violation challan etc. should be
e) Vehicles of persons who
automobile manufacturers made.
are caught for repeated
and distributors, NGOs, family
b) Linking insurance violations of driving without
members etc. One thing is for
database of insurers (or insurance should be confiscated
sure in order to convert this
Insurance Information Bureau and released only when they
challenge into an opportunity
of India-IIB) with motor produce valid insurance
technology will be the most
vehicle department and traffic certificates.
important tool.
police database. The “e-Vahan
Role of Regulator: The
Role of Law enforcement Bima” 9 initiative of Telangana
regulator has come up with
agencies: The only way to government is an example of
IRDAI (Obligation of Insurer
reduce “self insurance” and this and should be implemented
in respect of Motor Third Party
implement mandatory pan India. This will help in
Insurance Business)
insurance is with strict issuance of traffic challan for
Regulations, 2015. This tries to
enforcement of traffic rules. person driving without
put the obligations on insurers
However, our police force is insurance by just video
licensed to underwrite motor
terribly short of manpower recording vehicles at prominent
insurance business, to
and has plethora of activities points like traffic junctions,
underwrite a certain minimum
to manage. The number of petrol pumps; parking spaces
TP insurance premium. The
traffic police pan India was etc. and cross checking with
effect of this had already begun
only 39654 as on 01.01.20118. insurers (IIB) database for
to show and the TP insurance
This makes small and petty insurance details. Only when
premium has shown growth of
issues like traffic rules the probability of being caught
26.07% in 2016-17 (Table-A)
enforcement a least priority driving without insurance and
job. consequently the outgo in The Regulator has also been
terms of fine will increase, successful in notifying Third
Thankfully, today with people will be compelled to Party Insurance premium
great advancement in mobile
every year based on inputs and
Table-A
Growth of Third Party Insurance Premium
Year 2012-13* 2013-14* 2014-15* 2015-16* 2016-17**
TPP (Rs. crores) 12460 15237 17615 21036 26520
Growth in TPP 28.73 22.28 15.60 19.42 26.07
(*source Indian Non-life insurance Industry year book 2015-16 – General Insurance Council,
**Provisional unaudited figure at IRDAI website) suggestions of various
and information technology we substitute “self insurance” with stakeholders so that the interest
are better placed to overcome formal insurance. of all are best served. However,
shortage of manpower and the following avenues can
strictly implement traffic rules. c) The automation of
issuance of traffic challan will always be explored:
The following can be thought
of and also improved upon: lead to reduction in corrupt 1) To expand the net of
practices like bribe and will thus insurance and to
a) Effort to link every enhance demand for motor address mammoth
vehicle registered (starting with insurance. exclusion in two
new one sold) with Aadhar, wheeler segment,
option to link it to e-mail id, d) The linking of database
will also take care of fake obligation of insurers to

underwrite minimum places frequented by by promoting the use of
number of policies vehicles like petrol pumps, helmets during driving and loss
under motor insurance garages, co-operatives or mitigation through insurance.
should also be agencies handling parking The campaign of insurers,
considered. spaces etc. NGOs etc. should try to focus
upon the members of family as
2) For online web 2) Innovation in motor a whole. The campaign should
aggregators, providing insurance products has target on the need for having
quotes for vehicle given rise to single premium at least mandatory insurance to
insurance, the option to three year term motor avoid future inconvenience like
traffic fine, unnecessary
mandatorily display insurance products.
financial burden in case of
third party premium Though, third party accidents etc.
rates of participating premium are regulated by
insurers should also be IRDAI, yet some years Conclusion:
looked into. down the line after
“Exclusion in mandatory
accumulation of sufficient insurance” is somewhat
Role of Insurers: The transactional data, 5 years
insurers are the one who hold oxymoron. Yet, it is a reality, a
term single premium crude reality the answer to
the key to address this comprehensive motor which should not be tried to be
challenge. The role of insurer is insurance or 10 years term found out by applying
not limited to just providing single premium third party profitability criteria alone. The
insurance solution but extends product can be explored. social and welfare cost of
to partnering with various exclusion, though not easily
agencies like IIB, law Others quantifiable, can be devastating
enforcement agencies, motor in the long run. Legislation and
The role of others like
vehicle department etc. to work Regulation cannot be panacea
automobile manufacturers and
out modalities for for such issues. Innovative
distributors, NGOs and family
implementation of third party application of technology,
members can help play part in
insurance norms. They can also sensitizing potential
spreading insurance among
think of other steps like: consumers, coordination
this excluded segment. For
between various agencies and
example the auto
1) Extending their distribution commitment towards the cause
manufacturers as part of their
network beyond new will lead to converting this
advertisements, highlight the
vehicle showrooms to challenge into an opportunity.
need and importance of safety
Annexure A
Estimation of Third Party Premium loss due to uninsured two-wheelers under various
scenarios and projection up to 2024-25
Methodology followed to arrive at figures of Annexure A
Data Basis Assumption made and reason for it
No. of Two-wheelers in Detailed calculation A conservative estimate of vehicles registered
2015-16. in Annexure A1 in last 15 years (2001-02 to 2015-16) deemed
fit for insurance.

No. of Two-wheelers in Calculated with 10% growth rate approximated on trend of net
subsequent years growth rate of 10% addition
TPP rate in respective 2015-16 to 2017-18 2018-19 onwards calculated with growth rate
Year (in Rs.) median value of two of 15%, approximated based on CAGR of
wheelers actual rate. median TPP between 01.04.2010 to 01.04.2017.
Uninsured 0% to 100% to study the premium lost under
percentage rate various scenarios.

Third Party Premium Lost due to uninsured two wheelers (in Rs Crs.) Various scenarios of uninsured
percentages
FY 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25
No of Two
wheelers 1377.53 1553.42 1666.81 1833.49 2016.84 2218.53 2440.38 2684.42 2952.86 3248.14
(lakhs) —>
TPP rate (Rs.) 546 656 804 925 1063 1223 1406 1617 1860 2139
Uninsured
percentage 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25
0% 0 0 0 0 0 0 0 0 0 0
10% 752 994 1340 1695 2144 2713 3432 4341 5491 6947
20% 1504 1988 2680 3390 4289 5426 6863 8682 10983 13893
30% 2256 2982 4020 5086 6433 8138 10295 13023 16474 20840
40% 3009 3976 5360 6781 8578 10851 13727 17364 21966 27787
50% 3761 4970 6701 8476 10722 13564 17158 21705 27457 34733
60% 4513 5964 8041 10171 12867 16277 20590 26046 32949 41680
70% 5265 6958 9381 11867 15011 18989 24022 30387 38440 48627
75% 5641 7455 10051 12714 16084 20346 25737 32558 41186 52100
80% 6017 7952 10721 13562 17156 21702 27453 34728 43931 55573
90% 6769 8946 12061 15257 19300 24415 30885 39069 49423 62520
100% 7521 9940 13401 16952 21445 27128 34317 43411 54914 69467
Annexure A1 – Estimate of two wheelers registered in various years
Year Estimated No. of Cumulative starting Source

two Wheelers regd. from 2001-02
in the year **
2001-02 30,25,032 30,25,032 **Difference between data of two wheelers of successive
2002-03 59,38,431 89,63,463 years as available in Table 20.1 (No. of Vehicles registered
2003-04 44,02,484 1,33,65,947 in India) obtained from website of Government of India,

Ministry of statistics and Programme implementation at
2004-05 68,77,729 2,02,43,676
http://www.mospi.gov.in/statistical-year-book-india/2016/
2005-06 59,43,424 2,61,87,100
189
2006-07 43,85,636 3,05,72,736
2007-08 62,07,264 3,67,80,000
2008-09 70,66,079 4,38,46,079
2009-10 91,95,686 5,30,41,765

2010-11 1,02,66,791 6,33,08,556
2011-12 1,34,09,150 7,67,17,706 Society of Indian Automobile Manufacturers (SIAM -
2012-13 1,37,97,185 9,05,14,891 Domestic sales trend) at http://www.siamindia.com/
2013-14 1,48,06,778 10,53,21,669 statistics.aspx?mpgid=8&pgidtrail=14
2014-15 1,59,75,561 12,12,97,230

2015-16 1,64,55,851 13,77,53,081
2016-17 1,75,89,511 15,53,42,592
References: available in the internet at NTFM/MOTP/089/04/

http:// 2017 dated 17.04.2017
IRDAI (2016). Annual report
timesofindia.indiatimes.com/ available in the website of
2015-16, Hyderabad, IRDAI
india/60-of-vehicles-on- IRDAI
Bureau of Police Research & indian-roads-dont-have-
7. Table 3.8 on page 56 of
Development New Delhi insurance/articleshow/
Chapter 3 of “Data on
(2012), Data on Police 56744325.cms and
Police Organisations in
Organisations in India As on accessed on 06.05.2017
India as on 01.01.2011” of
January 1, 2011, New Delhi,
4. In a news article dated Bureau of Police Research
BPR&D
23.05.2015 of TOI & Development New Delhi
Notification of TPP available available in the internet at
at IRDAI website http:// 8. Handbook on e-Vahan
timesofindia.indiatimes.com/ Bima (e-Motor Insurance
The internet Policies) available at http://
india/75-of-2-wheelers-
1. Pg 18, Section I.3.34 of have-no-insurance/ www.hyderabadpolice.gov.in/
IRDAI Annual Report articleshow/47392161.cms assets/Handbook%
2015-16 20Electronic%20Motor%20
5. Report MR3 – “Vehicle Policies_version%20III.pdf
2. Pg 19, Table I.24 of IRDAI Class wise - Incurred Claim
Annual Report 2015-16 Ratio” of IIB for the year
2012-13 available at
3. In a news article dated OSD, Health Department , IRDAI
6. Ascertained from IRDAI
24.01.2017 of TOI
circular Ref: IRDA/NL/
Abbreviations used
Abbreviations Full form

IRDAI Insurance Regulatory and Development Authority of India
GIC General Insurance Council
TPP Third Party Premium
ICR Incurred Claim Ratio
TP Third Party
IIB Insurance Information Bureau of India
NGO Non-Governmental Organisation

Issue Focus
In God We Trust…
Mr. Jacob K Thomas sanguinely opines that data is the new oil and that
data management is the new engine of economic growth. He points out
the vital role played by the Insurance Information Bureau of India in
supporting the Insurance industry by providing it with sector-level data
to enable data- based and scientific decision making by the insurers.
- Jacob K Thomas
D ata is the new oil. It is

expected that the next wave of
In India also there was a need
felt for a body which could
and authentic.
Keeping in view the above

economic growth will be become the repository of all the
objectives, Insurance
churned by data and the new data and provide key inputs to
Information Bureau of India
value proposition it brings in the Regulator and the
(IIBI) was promoted in the
terms of more granular Government to assist them in
year 2009 by IRDAI, with the
segmentation, better policymaking. The body would
efforts of stakeholders of the
understanding of trends and provide necessary inputs for
insurance sector, with the
cyclicality and to a great extent policy research and insurance
objective of supporting the
the prediction of the future. industry development activities.
insurance industry with sector-
Well, one might say what’s new The body would act as a single
level data to enable data-based
in this, trend analysis and point source for insurance
and scientific decision making
forecasting are old tools industry data for real time
for pricing and framing of
available to us for long but what decision making and be neutral
business strategies.
is new is the way data is being
collected and the vast amounts Insurance Information Motor insurance is the largest
of data available today for Bureau of India (IIBI) was portfolio in the General
analytics. As an industry, promoted in year 2009 by Insurance sector in India. In
insurance has been traditionally IRDA, with the partici- FY 2016-17, nearly 9 crore
a big user of data, what with the pation of stakeholders of policies were issued which
fulcrum of the industry being the insurance sector, with generated more than 500
the law of averages. Therefore, the objective of supporting billion INR premium
the use of big data and the the insurance industry with accounting for nearly 40% of
various off-the-shelf analytical sector-level data to enable the total General Insurance
tools available has only made data-based and scientific business in India. Therefore the
things much more easy but at decision making for pricing data generated from the Motor
the same time, more and framing of business insurance portfolio is the
demanding. strategies. highest and the maximum
w number of data records

submitted is from this portfolio insurance policies through the
in General Insurance space. e-Vahan Bima. Going forward Going forward the citizen
For FY 2016-17, more than 200 the citizen may not need to keep may not need to keep the
million records (line item) are the insurance policy in any insurance policy in
expected to be submitted for the form, physical or electronic, as any form, physical or
various modes of submission by the insurance details of the electronic, as the insurance
the 22 insurers doing Motor vehicle will be provided by IIBI details of the vehicle will
business in India. to the respective enforcement be provided by IIBI to the
agency in an automatic respective enforcement
Data for Motor insurance is agency in an automatic
seamless manner.
submitted on a daily and seamless manner.
monthly basis to IIBI. IIBI is IIBI in particular has put in
collecting policy data on a daily place data sharing arrangement
w
basis for the insurance search with National Informatics
the vehicle, stolen status,
facility that it provides to the Center (NIC) for sharing of
insurance details of stolen
various enforcement agencies ‘VAHAN’ and insurance
vehicles which have been
across India. All insurers have databases for identification of
recovered, insurance details of
been mandated by the the uninsured vehicles in India.
vehicles involved in accident
Authority to submit data to The same is done also in
etc. IIBI has now developed a
IIBI for the policy incepted compliance with the directions
mobile application for easy
every day. IIBI has put in place of the Supreme Court
access of these services which
web services based system Committee on Road Safety. As
is going to be released soon.
wherein, by calling these web of today the data is being
services, starting from midnight exchanged on monthly basis For the enforcement agencies
of a particular day all the manually, however it is IIBI has put in the following
policies underwritten by the envisaged that the data shall be services :
Insurance companies the shared on daily basis through
previous day start getting web services being put in place. • Vehicle Insurance
submitted to the IIBI. This Based on the data shared by Status Search System
data-set is then shared with NIC and the mapping exercise (VISSS) - This service
various enforcement agencies done by IIBI till May 2017, helps the police to ascertain
by mid-morning through more than 50% of the vehicles the insurance status of a
another set of web services so on road in India today are vehicle by checking the
that Insurance status of any uninsured. Registration number or
vehicle is available to the beat Chassis and Engine
The Bureau provides a bundle number of the vehicle in the
staff of these agencies without
of services related to motor IIBI database. Details
having to resort to physical
insurance to multiple provided are searched and

checking of documents. This
stakeholders such as public, insurance status is provided
will help in ushering an
police, transport departments instantly. It is an authentic
environment of paperless
and insurers through its service source for enforcement
insurance in the country. The
package titled V Seva. The agencies to confirm the
Telangana government took a
services are available through insurance status of any
step in this direction by issuing
call centre, SMS and web-based vehicle and for enabling
necessary directions for legal
mode and provide information enforcement agencies to
acceptance of electronic
regarding insurance status of identify and take action on

uninsured vehicles. vehicles can be stopped. helps the police to submit
the information of any
• Vehicle Stolen Status • Stolen Vehicle Recovery
vehicle which has met with
Search System (VSSSS) Information System
an accident to IIBI. Police
- This service helps the (SVRIS) - Any police
needs to provide
enforcement agencies to personnel who has
Registration number or
find whether a vehicle is recovered a stolen vehicle
Chassis and Engine number
can find the insurance
stolen or not. Police needs of the vehicle involved in
details of the vehicle. He can
to provide Registration or the accident and also
contact IIBI through a toll
Chassis and Engine number accident details (place and
free number 1800 425 4734
of the vehicle and the details date). Informed accident
(short code 155266) and
provided are searched in vehicle details are mapped
IIBI will collect
IIBI database consisting of to IIBI insurance database
information like
and if mapped successfully
claims data of stolen Registration Number or
corresponding insurer is
vehicles and National Engine number and Chassis
intimated about accident
Crimes Record Bureau data Number, basic vehicle
and vehicle details and the
and the stolen status is details and the police
police will receive an
provided instantly. The station where the same is
acknowledgement. If the
benefit is, if stolen vehicles recovered from the
same is not mapped then
are being used they can be reporting officer for
the details are sent to all the
recovered by enforcement locating the insurance
insurers for further
details of the vehicle in
agencies and usage of stolen verification of the same.
IIBI’s database.
Acknowledgement is sent to Accident Vehicle
The Bureau provides a the e-mail id provided by the Information Retrieval
bundle of services related reporting officer. System (AVIRS) : V Seva
to motor insurance to also has a service for the
The vehicle details are searched
multiple stakeholders General Public called AVIRS.
in IIBI’s database and if found,
such as public, police, This facility is intended to help
the concerned insurance
transport departments the accident victims to locate
company is sent an e-mail
the insurer of the vehicle
and insurers through its informing the recovery of
involved in the accident. The
service package titled V vehicle and police station where
user needs to provide
Seva. The services are the vehicle is lying. It enables
Registration or Chassis and
available through call the insurance company to
Engine no. of the vehicle
centre, SMS and web- approach the police station for
involved in accident and also
based mode and provide further action and benefits the
accident details (place and
information regarding police in terms of early disposal
date). The details provided are
of recovered vehicles thus
insurance status of the mapped to IIBI insurance

saving space, getting rid of
vehicle, stolen status, database and if mapped
records maintenance, security,
insurance details of stolen successfully, accident victim is
complying with Supreme Court
vehicles which have been intimated the insurance details
directive, etc.
recovered, insurance through e-mail/SMS and
details of vehicles involved • Accident Vehicle corresponding insurer is
in accident etc. I n f o r m a t i o n intimated about details of the
w Submission System accident. Wherever no match
(AVISS) - This service takes place the details of the

vehicle is provided to all as and when the same has been
insurance companies. The sought.
The vehicle details are
access to this service is limited
searched in IIBI’s database IIBI has also developed various
to three times from the same
and if found, the concerned reports to mitigate frauds and
mobile number or e-mail
insurance company is sent help the insurer in recovery
address to avoid misuse of the
an e-mail informing the rights by putting in place the
system.
Stolen and Subsequently
recovery of vehicle and
Vehicle Claim History insured report which will
police station where the
Verification System identify vehicles which have
vehicle is lying. It enables
(VCHVS) : helps the insurer been stolen in the past and have
determine the claims history, the insurance company to come up for insurance, for the
both OD and TP, of any approach the police station insurer who has paid the claim
particular vehicle for the last for further action and to initiate recovery proceedings.
five financial years. The system benefits the police in terms Also for prudent underwriting
is primarily used for NCB of early disposal of it will identify vehicles which
confirmation but has wide recovered vehicles thus have come up for insurance but
scope for determining the claim saving space, getting rid of have been reported stolen in the
experience and in flagging records maintenance, past. Also IIBI is putting in
vehicles with suspicious and security, complying with place the Stolen & Total Loss
fraudulent past based on claims Supreme Court directive, vehicles database from FY
history. etc. 2014-15 onwards for insurers to
check the same, while
Graphical representation w underwriting.
of the V Seva Services
(Chart 1) IIBI also publishes various
and has also been providing
regular, thematic and bespoke
Apart from the above services data inputs to the various
reports. Very soon IIBI will
IIBI has been providing data to committees appointed by it,
release the Motor Annual
IRDAI for the Third Party when requested. IIBI has also
Report 2015-16, excerpts of
motor premium rating exercise provided data support to IRDAI
which are produced below :
Chart 1

Distribution of policies across different vehicle types – State-wise
Chart 3
Chart 2
Private Car -OD Claim Frequency based
on Time to Claim intimation

Chart 4
Chart 5
Mean OD Claims Paid – Top Districts – Minimum of 500 claims
Chart 6
Private Car -Districts with most prevalent Theft claims

Chart 7 The Annual Report work in terms of providing data members and to ensure that
2015-16 will provide many and analytical support to the this journey is meaningful and
meaningful insights and Indian General Insurance insightful.
inferences for the industry to industry for scientific decision
consider while strategizing and Jacob K Thomas
making. We hope to continue
framing business decisions. Incharge, Motor, Insurance
on this path to create further
Information Bureau of India
IIBI has been doing pioneering value to our stakeholders and

Issue Focus
Amendments in Motor Vehicles

Act and Increase in Third Party
Insurance Premium
Mr. N Majumdhar calls for extra care on the part of insurers while
underwriting proposals and investigating claims. He vouches for User
Based Insurance which would not only enable the insurers to make the
risk based pricing more effective but would also reduce the number of
fatal accidents.
- Nirjhar Majumdar
L atest amendments in Motor
Vehicles Act, have resulted in
As per new amendments in
Motor Vehicles Act, the fines for
transfer. The fine for over
speeding has been increased to
sharp increase in thirdparty violating traffic rules have also Rs. 2,000 from Rs. 400. For
insurance premium both in been increased. The penalty for drunken driving, the fine has
respect of private and driving a vehicle without been increased to Rs. 10,000
commercial vehicles plying on insurance has been doubled to from Rs. 2,000.
Rs. 2,000 to ensure that every
Indian roads. IRDAI initially
vehicle on the road has Under Motor Vehicles
proposed a 50% increase but
insurance. Also, if the owner of (Amendment) Bill, 2016, all
later it decided to increase the
the vehicle in whose favour the third party claims have to be
premium by much lesser insurance certificate is issued filed within six months from the
amount for all categories of transfers the vehicle, the date of accident. This will help
vehicles. In none of the insurance company must be the insurers to investigate each
categories, the increase will be informed within 15 days of the claim properly and settle it fairly
more than 41%.
quickly. Fraudulent claims can
While there is no increase in Under Motor Vehicles also be detected with fair degree
Amendment Bill 2016, all
premium for private cars with of accuracy. The insurers will
third party claims have to
engine capacities below be filed within six months no longer be required to set
1,000cc or a two wheeler with from the date of accident. aside a large amount of money
engine capacity below 75cc, This will help the insurers to meet claims incurred but not
the premiums under cars with to investigate each claim reported.
above 1,000cc engine capacity properly and settle it fairly
quickly. Fraudulent claims The new bill has categorically

will cost around 40% more.
can also be detected with stated that if a driver is found
The hike in premium for high
fair degree of accuracy. to be driving without a proper
power two-wheelers would be The insurers will no longer license or permit or found to be
in the range of 16 to 40% and be required to set aside a
under influence of alcohol or
for commercial vehicles in the large amount of money to
meet claims incurred but drugs, the insurers are not
range of 5-40%. IRDAI has not
not reported. supposed to pay claims if
asked the insurers to increase
accident occurs. The vehicle
premiums for own damage w owner/driver will have to
policies.
compensate the victims for the
Since motor premiums The reported claims frequency
losses.
were decided by Tariff is the highest for goods carrying
There has been an eight-fold Advisory Committee, the segment followed by passenger
increase in the compensation insurers could not increase carrying and private cars.
payable by insurers in hit and premiums according to the Insurers have to collect
run cases (from Solatium actual claims experience, differentiated premiums for
Fund), from Rs. 25,000 to Rs. on their own. Passing of different classes of risks.
2,00,000. That makes the Amendments of Motor Otherwise, there is a risk that
compensation system fairly Vehicles Act necessitated one category of motor
reasonable. Family members of serious changes to be made insurance will subsidise other
victims of road accident (other in the premium structure types.
than hit and run cases) will of third party motor
insurance. In case of third party
henceforth receive a
insurance, the insurers have
compensation of Rs. 5 lakh (ten w unlimited liability in case of loss
times what was payable earlier)
of life. Insurers wanted a cap on
within four months from the
provisions for claims losses. compensation payable (say at
date of accident.
These are the provisions every Rs. 10 lakh) but that has not
The new bill suggests setting up happened. Thirdparty liability is
non-life actuary has to make
of a Road Safety Board which decided and awarded by the
while determining future
should advice state judiciary on the basis of the age
premiums.
governments on all aspects of of deceased, earning capacity,
traffic management. Motor insurance portfolio of current level of income etc.,
non-life insurers has been in a which keep on rising due to
Why increase in premium
very poor shape for quite some inflation and other factors. The
is essential?
time. Incurred claims ratio Motor Vehicles (Amendment)
The price hike is not arbitrary stood at 81.18% for the industry Bill has substantially increased
in nature. The insurance in 2015-16. Annual hikes in quantum of compensation for
regulator analysed the accident third party premium enabled accident victims. In case of
data collected from Insurance the insurers only to cover some death in hit-and-run cases, the
Information Bureau of India of the past losses. The motor compensation has been
(IIBI) for the accident years insurance business became increased to Rs. 2 lakh from
2011-12 to 2015-2016. The almost non-viable for the Rs. 25,000. It also has provision
statistics of gross motor insurers. Since motor of Rs.10 lakh in the case of road
insurance premium collected premiums were decided by accident fatalities. The Bill
by insurers and claims paid by Tariff Advisory Committee, the proposes that the State
them have also been analysed. insurers could not increase Governments can apply
Many of these data are already premiums according to the multipliers to these
in public domain. The actual actual claims experience, on compensations, which should
claim costs for each their own. Passing of be not less than 1 and not more
underwriting year is calculated Amendments of Motor Vehicles than 10. Insurers will have to
by a method called “Chain Act necessitated serious pay the compensation within
Ladder Method”. This method changes to be made in the 30 days from the date of receipt
takes into account provisions premium structure of third of record of settlement. If third
for unearned premiums and party motor insurance. party premiums are not hiked

sufficiently, they will incur such Let us look at the Incurred
huge losses that they will Claims ratios of the Public and The proposed premium
become insolvent one day and Private insurers in respect of rate structure is an attempt
that in turn will affect the motor insurance portfolio of to make risk based pricing
interest of accident victims. non-life insurers in the last 5 of motor third party
years. insurance products. It is a
step towards making
Table-1: Incurred Claims Ratios of Public and Private insurance pricing more
Insurers as a whole transparent and rational.
Year Incurred Claims Ratios w
Public Sector Insurers Private Sector Insurers
2011-12 134.9 118.7 deaths of people of varying
2012-13 91.0 124.7 ages. Road accidents kill far
more people in India than
2013-14 103.2 123.4 terrorism and natural disasters
2014-15 88.5 106.7 combined does. Let us have a
look at Table-2 below.
2015-16 78.8 96.7
Source: Indian Non-Life Insurance Industry Yearbook 2015- The above table shows that
16 (General Insurance Council) persons injured and killed in
road accidents are rising. That
The above table clearly indicates Some official facts in public is why claims related outgo of
that there is huge shortfall of domain insurers are rising every year.
premiums received as
Every year, 5,00,000 road India is a signatory to Brasilia
compared to claims incurred. In
accidents are reported in the declaration and is committed to
monetary terms, the industry
country. This results in 1,50,000 reduce the incidence of road
loses about Rs. 10,000 crore
accidents by 50% by 2020. But,
every year from motor
insurance business. The Table-2: Road Accident Parameters of 2014 and 2015
solution is simple. The vehicle
Parameter 2014 2015 Percentage Change
users have to pay higher
over previous year
premiums and there has to be
more stringent implementation Total accidents in the country 4,89,400 5,01,423 2.5
of the provisions of penalties on Total number of persons killed 1,39,671 1,46,133 4.6
those who flout traffic rules. in the country
The proposed premium rate Total number of persons injured 4,93,474 5,00,279 1.4
structure is an attempt to make in the country

risk based pricing of motor third Accident Severity* 28.5 29.1 2.1
party insurance products. It is
a step towards making *No of Persons Killed Per 100 Accidents
insurance pricing more Source: Report of Transport Research Wing, Government of India
transparent and rational.

the way road accidents are Table-3 shows a cause wise of road accidents in India.
increasing every year, that goal analysis of accidents that Therefore, it is not unfair to
seems to be almost occurred in 2015 on Indian increase motor insurance
unattainable. The severity of roads. This clearly helps us to premium as the people who are
road accidents, measured in understand who are primarily causing accidents have a moral
terms of persons killed per 100 responsible for so many responsibility to make good the
road accidents is on the rise. accidents on Indian roads. losses.
54.1% of road accident victims
From the above table, it is clear Number of road accidents per
are in the age group 15-34
that negligent driving of 10,000 vehicles in India is 120
(consisting of people on the
vehicles is causing more than whereas the corresponding
vehicle including drivers and
80% of accidental injuries and figure is only 10 in developed
innocent pedestrians). Road
deaths. Fault of pedestrian is countries. Number of deaths
accidents cause loss to the
only in 1.5% of cases. Poor road per 10,000 vehicles is 55 in
economy to the tune of 3% of
condition, weather condition, India whereas the
GDP. This is far higher than
poor street lighting and corresponding figure in western
1.5% for other middle income
neglectly civic bodies are countries is only 2. There is
countries of the world.
causing very small proportion another way to compare road
Table-3: Accidents in 2015 classified according to causes related deaths of various
countries. This is known as
Causes of Accidents No. Of No. Killed No. Injured in accidental deaths per 1 lakh
Accidents in Accidents Accidents population of a country. These
Fault of Driver 3,86,481 (77.1) 1,06,021 (72.6) 4,01,756 (80.3) figures are given in Table-4 in
Fault of Cyclist 3, 695 (0.7) 1,384 (1.0) 2,928 (0.6) respect of India alongside some
selected developed countries.
Fault of Driver of 24,431 (4.9) 6,961 (4.8) 19,686 (3.9)
Other Vehicles
Negligent driving of
Fault of Pedestrian 7,509 (1.5) 2,690 (1.8) 5,962 (1.2)
vehicles is causing more
Defect in condition 11,601 (2.3) 4,127 (2.8) 9,818 (2.0) than 80% of accidental
of motor vehicle injuries and deaths. Fault
Defect in road condition 7,314 (1.5) 2,733 (1.9) 6,122 (1.2) of pedestrian is only in
1.5% of cases. Poor road
Weather condition 5,781 (1.2) 2,552 (1.7) 4,792 (1.0)
condition, weather
Fault of passenger 6,668 (1.3) 2,657 (1.8) 6,265 (1.2) condition, poor street
Poor light 5,456 (1.1) 2,095 (1.4) 4,809 (1.0) lighting and neglect by
civic bodies are causing
Falling of boulders 1,087 (0.2) 505 (0.3) 966 (0.2) very small proportion of
Neglect of civic bodies 1,076 (0.2) 416 (0.3) 902 (0.2) road accidents of India.
Therefore, it is not unfair
Stray animals 1,534 (0.3) 579 (0.4) 2,044 (0.4) to increase motor
Causes not known 38,790 (7.7) 13,413 (9.2) 34,229 (6.8) insurance premium as the
people who are causing
Total 5,01,423 (100.00) 1,46,133 (100.00) 5,00,279(100.00) accidents have a moral
responsibility to make
Figures in parenthesis are the percentage shares
good the losses.
Source: Report of Transport Research Wing, Government of India w
Table-4: Cross country comparison of road related deaths the opportunity and accidents
in the world in 2013 will also be less.
Country Killed per Country Killed per The kind of User Based
1,00,000 1,00,000 Insurance (UBI) mentioned
population population above has become extremely
popular in US, Australia, Italy
Australia 5 France 5
and UK and also in other parts
Germany 4 Japan 4 of Europe. Some experts feel
that India can make a smooth
New Zealand 6 Portugal 6
transition to UBI right now.
Singapore 3 United Kingdom 3 This kind of insurance has
other benefits. The insurers can
Israel 3 Canada 5
in fact monitor the driving style
Denmark 3 India 11 of the driver and can even give
him a lot of training on safe
Source: World Road Statistics 2015 driving resulting in lower
number of accidents.
Accidents on Indian roads are insurers should continuously
Emergency assistance can also
taking more lives than many request the Motor Vehicles
developed countries per one department and the road
lakh population although a transport departments of State
Accidents on Indian
large part of our country is still and Central governments, to
roads are taking more
non-motorable. Approximately concentrate on improving road
lives than many
12% of the world’s road fatalities safety especially in those states
developed countries per
happen on Indian roads. This which are responsible for
one lakh population
can be attributed to rapid higher number of accidents
although a large part of
motorisation, poor every year (e.g. Maharashtra,
our country is still non-
infrastructure and laxity in Tamil Nadu).
motorable. Western
enforcing legislation. Those who adhere to safety countries impose basic
Developed countries enfore standards should be given a traffic rules more strictly
basic traffic rules more strictly chance to pay lower premiums. and that is perhaps the
and that is perhaps the reason They should agree to share real reason of much fewer
for much fewer road related time data on their driving road related deaths there.
deaths there. If a person is found behaviour with insurers. If a person is found to be
to be guilty of causing deaths Telematics and improved guilty of causing deaths
and serious injuries while features in some cars can and serious injuries while
driving in drunken state, he will enable the insurers to know driving in drunken state,
not only lose his driving license whether the proposer deserves he will not only lose his
but also his professional license. lower third party premium. At driving license but also his
Similar legislation should be in least one year’s desirable driving professional license.
place in our country, too. behaviour should qualify a Similar legislation should
What can be done by person to get the benefit of be in place in our country,
insurers here? lower rate of premium. If such too.
incentive is in place, people will w
In their own interest, the
drive more responsibly to avail

be provided by the insurers in Motor third party insurance is
case of emergency. Motor third party at the crossroads now. The
industry is moving towards risk
Insurers should use technology insurance is at the
based pricing from asset based
to figure out bonafides of a crossroads now. The
pricing. The premium rates
claim. Bajaj Allianz has decided industry is moving towards
have increased for all types of
to introduce a simulation risk based pricing from
vehicles. The compensations to
technology to reconstruct asset based pricing. The accident benefits have also
accidents. They are also hiring premium rates have increased. Insurers have to be
forensic specialists and medical increased for all types of more careful in underwriting
officers to investigate vehicles. The compen proposals and investigating
genuineness of accidental
sations to accident benefits claims. In my opinion the
claims. Other insurers can take
have also increased. future of the industry lies in
similar measures to detect
Insurers have to be more User Based Insurance as that
fraudulent claims. According to
careful in underwriting alone can enable the insurers to
one estimate, more than 6% of
proposals and investigating make risk based pricing most
motor and health claims are
claims. effectively. That will also
fraudulent in nature in our
w reduce the number of fatal
country. In fact, insurers
accidents to a very large extent.
should share their databases of
fraudulent claims so that the accident data and claim - Nirjhar Majumdar
fraudsters never get to profit at liabilities have to be made
the expense of insurers’ money. available in the public domain. Manager (Legal) Asansol
Division, LIC of India
There was a nationwide Many people now say that
truckers’ strike following insurers can charge lesser
IRDAI’s proposal to premium in motor third party
significantly increase Third insurance as they earn a lot of
Party Premium for commercial investment income anyway.
vehicles. The main demand of This is not true. Non-life
the truckers’ association was to contracts are all annual
share the accident data on real contracts. Non-life insurers do
time basis. This was a not have as large investable
legitimate demand. The fund like life insurers. In fact,
industry must take measures to 93% of insurers’ investments in
build accident data and these Indian financial market are
data have to be shown in the made by life insurers. Only
websites of all insurers and the about 7% of investments are

general insurance council of made by non-life insurers.
India. Then nobody will be able Regarding motor insurance, we
to challenge the decision to can say that there is very little
raise the premium rates. The investable surplus as most
way mortality table of the motor insurance portfolios are
Indian lives is available in incurring underwriting losses!
public domain, the motor

Issue Focus
Auto-drive in a non-tariff
zone
Mr. N M Behera presses upon the need to move to a risk based pricing
from the present administered pricing in the motor portfolio so as to
create a win-win situation for all the stakeholders. De-tariffing is the
way forward he believes, arguing that a risk based pricing is more
relevant than the current one size fits all approach.
- Dr. N M Behera
U nlike other lines of the total general insurance of business, except the motor
business, motor third party business in India (2015-16 third party insurance, have
insurance is mandatory by law. IRDAI Annual Report), where been detariffed long before in
The unique difference between almost 48% of motor business respect of product pricing. It is
motor TP and other lines of comes from third party alone difficult to say that the motor
business is that in case of motor, (source GI Council Annual TP, which constitutes a major
a vehicle plying on the public Report). It means around 25% contributor for the non-life
road must have a third party of total general insurance industry, will continue to be
insurance cover. In one way, it business is emanated from under a tariff for long.
is a must to buy insurance and motor TP alone. All the classes Therefore, it is time that one
on the other, there is no price should keep the options open
differentiation based on risk Detariffing will perhaps set and foresee the effects of TP
profile of the vehicle. Today, the a change- from the ways the Premium detariffing, if it
TP Premium is still under a type pricing is now made from happens any time.
of tariff, published by Insurance one size fits all to different Detariffing will perhaps set a
Regulator for every financial sizes for different people. change- from ways the pricing
year. Motor TP business is Individual choice on is now made from one size fits
considered to be a loss making inherent risk at the all to different sizes for different
segment, mainly attributed to individual risk level will be people. Individual choice on
the nature of MV Act provision rule. The rating could be inherent risk at the individual
of Unlimited Liability and expected to be more risk level will be the rule. The
frauds involved. Though there scientific. And the focus rating could be expected to be
was a push to limit the liabilities, will more be on the more scientific. And the focus
it seems there wouldn’t be any individual buyer than a will more be on the individual
change in the provision of the broad overview of buyer than a broad overview of
Act. categories through an categories through an
Motor segment contributes administered pricing. administered pricing. This may
almost 43.89% of premium to w lead to active participation of

the owners, drivers and the different individuals will be more importance to sound
features of a vehicle. The different based on the risk underwriting, which is a core
proposal and declarations by associated with them. It could function. Good customers
the policyholder, which will be expected that the price will would gain and risks with bad
generally include type, make, be competitive and will be based features will stand to pay more.
model, claims history, driver’s on individual risk assessments. This will help customers to
habits, age and experience and The customer will have an maintain good risks.
driver’s driving history etc, will option to choose the insurer and
However, unless the market
play a major role in deciding the coverage based on the need
behaves properly, the market
the insurance price of a and pricing. Customer will
could witness price competition
particular vehicle. Under a risk expect a fair price due to
leading to unhealthy situations.
based pricing, perhaps the competition after detariffing.
The unhealthy pricing could
customers will become more
The market may be able to see result into lesser profit, lesser
sensitive for safe driving and
new and innovative products solvency, and lower
more concerned towards
and add-on cover linked to international ratings and poorer
creating an environment of less
driver risk profile, vehicle underwriting capacity. There is
number of accidents,
features and the owner’s also a chance, that the insurers
consequently further reducing
participation in the risk. In may make a cartel and charge
the premium to be paid by the
other countries, policies are sold
owner.
on driver basis, policies are also Deatriffing will be a move
It is understood that almost marketed on “pay as you go towards risk based
50% vehicles are found to be basis”. The latter will reduce the premium from a rule
uninsured. The insurers will annual insurance cost of a based premium calcu-
make an attempt, with the help vehicle owner. In this case, the lation. There will be chance
of ongoing endeavour by the owner may not be required to that the owners will get fair
enforcement agencies, to cover pay the full annual premium, treatments. The pricing for
uninsured vehicles to create a but a portion as per his usage different individuals will
better pool of third party time only. There could be other be different based on the
premium sufficient enough to innovations in product range risk associated with it. It
meet with the liabilities. By this too. could be expected that the
process, on one hand the price will be competitive
As already mentioned, the
income from insurance from and will be based on
insurers will try hard to fetch
uninsured vehicles will increase individual risk assess-
the uninsured vehicles and try
and on the other claims ratio ments. The customer will
to build up the volume of
will improve, giving a fillip to have an option to choose

business. This will encourage
hunt for all uninsured vehicles. the insurer and the
vehicle owners to participate in
Detariffing will be a move loss minimisation measures coverage based on its need
towards risk based premium and improving the risks by and pricing. Customer will
from a rule based premium employing good drivers, expect a fair price due to
calculation. There will be maintaining vehicles in good competition after
chance that the owners will get condition and minimising detariffing.
fair treatment. The pricing for exposures. The insurers will give
w
De-tariffing may witness other will bring down the claim cost.
However, any move for de- challenges that the transporters And finally in the long run, it
tariffing of motor TP may lobby and even come on could be a win win situation for
Premium should be seen the road calling strikes and all stakeholders.
from a long term bandhs against such a move if
Driving in a new land could be
perspective and like others, they apprehend that de-
difficult and may face some
motor TP premium should tariffing may not be favourable
bumps initially. But once
also be taken out from the to them. Therefore, before
accustomed with the new
rule based tariff. This will moving towards de-tariffing a
conditions, auto-drive in the
help the market grow. This plan of action needs to be
non-tariff zone could also be
will encourage the vehicle initiated and all the
safer and the journey will be
owners to buy insurance. stakeholders may be taken into
enjoyable. This could be a
Coverage of uninsured confidence.
welcome move not only for the
vehicles will increase. With
Under the above customers, but also for the
increase in number of
circumstances, the role of the insurers and finally for the
vehicles, the law of large
insurance regulator will be socio-economy.
numbers will play its role
highly crucial to control the
and will bring down the Dr. N M Behera
market and to ensure that the
claim cost. And finally in DGM (Reinsurance Dept.)
interests of the policyholders
the long run, it could be a IRDAI
are not gone unprotected. It
win win situation for all nmbehera@gmail.com
also needs to be ensured that no
stakeholders.
w vehicle is denied insurance and
no vehicle is charged with a
higher premium than actually
higher premium which do not required under the risk
commensurate with the risk assessment.
assessment considering TP However, any move for de-
insurance is compulsory under tariffing of motor TP Premium
law and found to be a loss should be seen from a long term
making portfolio. Some even perspective and like others,
may take other shelters to deny motor TP premium should also
the cover, considering the fact be taken out from the rule
that the portfolio is a bleeding based tariff. This will help the
one. Under these market grow. This will
circumstances, the owner may encourage the vehicle owners to

have to pay a very high price buy insurance. Coverage of
or may run the vehicle without uninsured vehicles will increase.
any insurance cover. This is With increase in number of
never the objective of any de- vehicles, the law of large
tariffing nor is considered as a numbers will play its role and
welcome move.

In the Air
April-September, 2017
1. IRDA/IT/GDL/MISC/ launched the registration Appointment of an

8 2 / 0 4 / 2 0 1 7 : portal for Insurance Self Appointed Actuary along
Guidelines on Networking Platform. with listing out the
Information and Insurance companies, current provisions for the
Cyber Security for brokers and corporate existing Appointed
insurers. agents can sell and service Actuaries. It also lists out
insurance policies through the powers, duties and
IRDAI issued guidelines obligations and the
this platform.
to all insurers on conditions for the
Information and Cyber 3. IRDAI/Reg/4/141/ cessation of Appointment
Security by exercising the 2017: Insurance of Appointed Actuary.
powers vested with it Regulatory and
5. IRDA/INT/CIR/IMF/
under Sub-section (1) of D e v e l o p m e n t
122/05/2017:
Section 14 of the IRDA Authority of India
Act, 1999. All insurers are (Insurance Web Procedure to be followed
made responsible to A g g r e g a t o r s ) to deal with the
ensure that adequate Regulations, 2017. resignation of Insurance
Sales Persons (ISPs) of
measures are put in place
The objective of the Insurance Marketing
to ensure that all issues
Insurance Web Firms (IMFs).
related to Information
Aggregator Regulations is
and Cyber Security are 6. IRDAI / Reg/8/145/
to supervise and monitor
addressed. This becomes 2017: Insurance
Web Aggregator as an
important because the Regulatory and
insurance intermediary D e v e l o p m e n t
policy holder information
who maintains a website Authority of India (
is shared with
for providing interface to Protection of
intermediaries and other
the insurance prospects for Policyholders’
regulated entities.
price comparison and Interests) Regulations,
information of products of 2017: To ensure that the
different insurers and interests of insurance
2. IRDA/INT/CIR/ECM/
other related matters. policyholders’ are
083/04/2017: Filing of
protected. To ensure that
online application for 4. IRDAI/Reg/6/143/

insurers, distribution
Insurance Self 2017: Insurance
channels and other
Networking Platform Regulatory and
regulated entities fulfil
(ISNP). D e v e l o p m e n t
their obligations towards
Authority of India policyholders and have in
In order to increase
(Appointed Actuary) place standard procedures
insurance penetration
Regulations, 2017. and best practices in sale
through the medium of e-
commerce, IRDAI has The regulation elucidates and service of insurance
issued guidelines. IRDAI the procedure for the policies.

NON -LIFE
NON-LIFE INSURANCE
INSURANCE

NON-LIFE INSURANCE

NON-LIFE INSURANCE

NON-LIFE INSURANCE

NON-LIFE INSURANCE

NON-LIFE INSURANCE

NON-LIFE INSURANCE

NON-LIFE INSURANCE

NON-LIFE INSURANCE

NEW BUSINESS DATA

NEW BUSINESS DATA

NEW BUSINESS DATA

NEW BUSINESS DATA

NEW BUSINESS DATA

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Regulatory and Development
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Authority of India,
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Cross word Solutions
(January-March, 2017)
Across
1. Third Party Administrator
2. Reinsurance
3. Morbidity
4. Wellness Measures
5. Rating
Down
1. Takaful
2. UHIS
3. Primary Care
4. Penetration
5. Mortality
6. Deductible
7. Coinsurance
8. Cashless
9. Group Discount
10. Anti Selection
11. Copayment
12. RSBY

List of Non Life Insurers List of Life Insurers
1. Agriculture Insurance Co. of India Ltd. 1. Aegon Life Insurance Co. Ltd.
2. Apollo Munich Health Insurance Co. Ltd. 2. Aviva Life Insurance Co. India Ltd.
3. Bajaj Allianz General Insurance Co. Ltd. 3. Bajaj Allianz Life Insurance Co. Ltd.
4. Bharti Axa General Insurance Co. Ltd. 4. Bharti AXA Life Insurance Co. Ltd.
5. Cholamandalam MS General Insurance Co. 5. Birla Sun Life Insurance Co. Ltd.
Ltd.
6. Canara HSBC Oriental Bank of Commerce Life
6. Cigna TTK Health Insurance Co. Ltd. Insurance Co. Ltd.
7. Export Credit Guarantee Corporation of India 7. DHFL Pramerica Life Insurance Co. Ltd.
Ltd.
8. Edelweiss Tokio Life Insurance Co. Ltd
8. Future Generali India Insurance Co. Ltd.
9. Exide Life Insurance Co. Ltd.
9. HDFC ERGO General Insurance Co. Ltd.
10. Future Generali India Life Insurance Co. Ltd.
10. ICICI Lombard General Insurance Co. Ltd.
11. HDFC Standard Life Insurance Co. Ltd.
11. IFFCO Tokio General Insurance Co. Ltd.
12. ICICI Prudential Life Insurance Co. Ltd.
12. L&T General Insurance Co. Ltd.
13. IDBI Federal Life Insurance Co. Ltd.
13. Liberty Videocon General Insurance Co. Ltd.
14. IndiaFirst Life Insurance Co. Ltd
14. Magma HDI General Insurance Co. Ltd.
15. Kotak Mahindra Old Mutual Life Insurance Ltd.
15. Max Bupa Health Insurance Co. Ltd.
16. Life Insurance Corporation of India
16. National Insurance Co. Ltd.
17. Max Life Insurance Co. Ltd.
17. The New India Assurance Co. Ltd.
18. PNB MetLife India Insurance Co. Ltd.
18. The Oriental Insurance Co. Ltd.
19. Reliance Life Insurance Co. Ltd.
19. Raheja QBE General Insurance Co. Ltd.
20. Sahara India Life Insurance Co. Ltd.
20. Reliance General Insurance Co. Ltd.
21. SBI Life Insurance Co. Ltd.
21. Religare Health Insurance Co. Ltd.
22. Shriram Life Insurance Co. Ltd.
22. Royal Sundaram Alliance Insurance Co. Ltd.
23 Star Union Dai-Ichi Life Insurance Co. Ltd.
23. SBI General Insurance Co. Ltd.
24. Tata AIA Life Insurance Co. Ltd.
24. Shriram General Insurance Co. Ltd.
25. Star Health and Allied Insurance Co. Ltd.
26. Tata AIG General Insurance Co. Ltd.
27. United India Insurance Co. Ltd.

28. Universal Sompo General Insurance Co. Ltd.
29. Kotak Mahindra General Insurance Co. Ltd.
30. Aditya Birla Health Insurance Co. Ltd.
31. DHFL General Insurance Limited
32. Acko General Insurance Limited.
33. Go Digital General Insurance Limited.

Policyholder Servicing Turn Around Times
Policy Service Maximum

Turn Around Time
Processing of Proposal and communication of decisions
including requirements/ issue of Policy/Cancellations 15 days
Issuing copy of proposal form 30 days
Response by the insurer on post policy issue service
related requests such as change in address/nomination/
assignment of policy etc. 10 days
LIFE INSURANCE
Surrender value/Annuity/Pension processing 10 days
Maturity Claim/Survival Benefit/Death claim
without investigation 30 days
Raising claim requirements after lodging the claim 15 days
Death Claim Settlement / Repudiation with investigation
requirements 6 months
GENERAL INSURANCE
Appointment of Surveyor 3 days
Survey Report Submission 30 days
Insurer seeking addendum report 15 days
Offer of settlement/rejection of claim after receiving first /
addendum survey report 30 days
GRIEVANCES
Acknowledging a Grievance 3 days
Resolving a Grievance 15 days

Some Important Insurance Related Websites
Insurance Related Links
1 Insurance Regulatory and Development www.irdai.gov.in

Authority of India (IRDAI)
2 IRDAI Consumer Education Website www.policyholder.gov.in
3 Insurance Information Bureau of India www.iib.gov.in
4 IRDAI Agency Licensing Portal www.irdaonline.org
5 Integrated Grievance Management System (IGMS) www.igms.irda.gov.in
6 Mobile Application to Compare ULIPs www.m.irda.gov.in
Insurance Education Institutions
1 Institute of Insurance and Risk Management (IIRM) www.iirmworld.org.in
2 Insurance Institute of India (III) www.insuranceinstituteofindia.com
Editorial Board 3 Institute of Actuaries of India (IAI) www.actuariesindia.org

Smt. Pournima Gupte, Member (Actuary), IRDAI
Shri P.J. Joseph, Member(Non-Life), IRDAI 4 National Insurance Academy (NIA) www.niapune.com
Shri Nilesh Sathe, Member (Life), IRDAI
Dr. T. Narasimha Rao, Managing Director IIRM International Links
Shri Sushobhan Sarker, Director, National Insurance Academy
Shri P. Venugopal, Secretary General, Insurance Institute of India 1 International Association of Insurance Supervisors www.iaisweb.org
Shri V. Manickam, Secretary General, Life Insurance Council
Shri R. Chandrasekaran, Secretary General, General Insurance Council
2 National Association of Insurance Commissioners www.naic.org
Dr. Nupur Pavan Bang, Associate Director Indian School of Business
Editor 3 International Gateway for Financial Education www.financial-education.org

K.G.P.L. Rama Devi
Other Links
Published by T.S Vijayan
of behalf of Insurance Regulatory and 1 Governing Body of Insurance Council (GBIC) www.gbic.co.in
2010 Insurance Regulatory and Development
Development Authority of India
Authority of India
2 General Insurance Council www.gicouncil.in
Printed at: NavaTelangana Printers Pvt. Ltd.,
Please reproduce with due permission
# 21/1, M.H. Bhavan, Near RTC Kalyanamandapam, 3 Life Insurance Council www.lifeinscouncil.org
Azamabad Industrial Area, Musheerabad, Hyderabad
The information and views published in this
Ph: 91-40 27673787, 27665420 4 Insurance Brokers Association of India (IBAI) www.ibai.org
journal are those of the authors of the articles.
Disclaimer: Due to administrative reasons, IRDAI could not roll out the previous edition of the Quarterly Journal.

IRDAI Journal September 2017

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Some Important Insurance Related Websites

Insurance Related Links

1 Insurance Regulatory and Development www.irdai.gov.in

2 IRDAI Consumer Education Website www.policyholder.gov.in

3 Insurance Information Bureau of India www.iib.gov.in

4 IRDAI Agency Licensing Portal www.irdaonline.org

5 Integrated Grievance Management System (IGMS) www.igms.irda.gov.in

6 Mobile Application to Compare ULIPs www.m.irda.gov.in

Insurance Education Institutions

1 Institute of Insurance and Risk Management (IIRM) www.iirmworld.org.in

2 Insurance Institute of India (III) www.insuranceinstituteofindia.com

Editorial Board 3 Institute of Actuaries of India (IAI) www.actuariesindia.org

Editor 3 International Gateway for Financial Education www.financial-education.org

Government has identified crop insurance as

Motor Vehicle Insurance 1

2 Motor Vehicle Insurance

Changing Dynamics of Indian Motor

14 Motor Insurance and Liability

18 Motor Insurance – a realistic view…

56 New Business Data

Amendments in Motor Vehicles Act and

43 Auto-drive in a non-tariff zone

Motor Vehicle Insurance 3

challenges and the possible ways to fix them.

4 Motor Vehicle Insurance

- Praveen Gupta FCII

T he capping of Motor Third

modes of transportation, per capita income kept rising

6 Motor Vehicle Insurance

Motor Vehicle Insurance 7

could mid to long-term were in favour of autonomous

IRDAI Journal September - 2017

Motor Vehicle Insurance 9

amendment to Motor Vehicles Spaces: Serving the

10 Motor Vehicle Insurance

IRDAI Journal September - 2017

Motor Vehicle Insurance 11

bill passed by Lok Sabha

12 Motor Vehicle Insurance

The Success of the Motor Development Policy

Motor Vehicle Insurance 13

Motor Insurance and

14 Motor Vehicle Insurance

Motor Vehicle Insurance 15

16 Motor Vehicle Insurance

Motor Vehicle Insurance 17

scenario in India is discussed 2015 the insurance

life or property caused by

Policies Available Package Policy Liability Only Policy

Premium in Rs. (Excluding Service Tax) 9835.0 2863

Table 2: Comparison of vehicles that are insured to the uninsured

All figures in lakh 2011-12 2012-13 2013-14 2014-15

Registered motor vehicles 1595 1825 2100 2305

Insured for TP only 216 238 144 220

Insured for MOD package 425 503 551 603

Total vehicles insured 641 741 695 823

No of Vehicles uninsured 954 1084 1405 1482

Percentage 59.84% 59.39% 66.93% 64.30%

Vehicles without MOD Insurance 1170 1322 1549 1702

Percentage 73.35% 72.45% 73.78% 73.85%

20 Motor Vehicle Insurance

Premium in Crores (Rs.) 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15

Motor Own Damage 9486 12036 14078 19595 17768 18019

Motor Third Party 5857 6139 9729 10094 15873 19547