Don't charge more than agreed premium, IB says insurers

KATHMANDU, Jan 15: Insurance Board (IB), the regulatory authority, has instructed insurers not to compel their customers pay more than agreed premium for the third party insurance.



The instruction was issued after the board received complaints against insurance companies who were charging much higher rate than agreed for the third party insurance, said IB Chairman Dr Fatta Bahadur KC.[break]



Under the agreed premium, 17 general insurance companies had committed to charge just Rs 1,000 and 13 percent VAT for third party cover for 150cc of motorcycles. For cars, the premium ranges from Rs 4,500 to Rs 6,000. Likewise, agreed premium for taxis stand at Rs 5,600 and passenger vehicles like minibuses should pay Rs 17,000 for the facility.



The rates were agreed at the time when the government made third party insurance mandatory for vehicles in August 2009. “However, we received complaints about companies charging more than what they had agreed to,” said Dr KC. He refused to pin point particular cases of defiance though.



IB has further asked the companies not to issue insurance cover to any vehicles without incorporating third party liability. “The clear goal of this directive is to enforce the third party insurance as mandatory,” said Dr KC.



His statement, however, clearly indicates that a large number of vehicles are still plying on the road without due third party insurance cover. This is a clear defiance of law.



According to Department of Transport Management´s records, a total of 850,614 vehicles are plying on the roads throughout the country. They include 19,685 buses, 7,497 mini buses, 40,437 trucks and tankers and 112,300 cars, sports utility vehicles and vans, among others.



Officials said mainly the passenger vehicles operating under different transport associations´ syndicate have continued to ignore the law. The government had made the third party insurance, worth half a million rupee, compulsory mainly to do away with increased road accidents and problems seen in compensating the victims. Under the new rule, kin of victims of road accidents can legally claim treatment cost of up to Rs 200,000 and death or permanent disability compensation amount of as much as Rs 500,000 from the vehicle owners.



Even the bike owners will need to pay half a million sum in compensation if an accident causes death of a person. The provision had almost doubled the insurance cost for the private vehicle owners.

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