Insurance fraud

It is very unfortunate that insurance companies are flouting a previously-reached understanding and forcing clients to pay more than what they had agreed for third party insurance. Indeed, the government´s decision to make third party insurance mandatory last year has proved to be good for minimizing traffic-accident related disputes. But the practice of insurance companies charging more than double the agreed premium is in fact an act of fraud. During the preparatory phase, the Insurance Board, the regulatory body, acting on the government´s policy of keeping the insurance premium rate as low as possible had sought the insurers´ support, and subsequent to that they agreed to keep the premium down to a minimum. Sadly, however, the companies have refused to stand by their own word. This is condemnable in the strongest language possible.



As told to us, third party insurance has already brought positive results. We have few incidents these days of highways and roads being blockade by irate locals in case of road accidents. It has sharply cut down hit-and-run cases, making the roads safer. It has also made compensation predictable, thereby easing things for both accident victims and vehicle owners. The kin of accident victims no longer have to assemble a crowd to secure fair compensation, as they can legally claim treatment costs of up to Rs 200,000 and death or permanent disability compensation of as much as Rs 500,000. This has helped improve public behavior. Vehicle owners too, including bikers, can be spared the sudden emergence of huge liabilities, transferring these to the insurance companies instead.



The third party provision has also widened the business of insurance companies, helping the market expand and mature. The third party insurance premium agreed upon was worked out by the companies themselves. So, it incorporates all the cost and risk factors. The companies are clearly not in loss over the deal. The move by the companies now to ask customers to pay more for the service is hence unfair and unacceptable. Besides, with a rise in business and growth in the industry, customers were expecting the companies to compete and offer the service at a still lower rate. However, the companies have shattered this genuine hope of the general customer. Such an unnatural rise in cost could even encourage vehicle owners to evade the rule. It will be damaging for the industry as a whole, and derail the process of establishing this internationally practiced insurance rule in the country. So we urge the companies to act sensibly. At the same time, we also urge the Insurance Board to step up its inspection and make sure companies comply with its directives on ´compulsory third party insurance´ and ´adherence to the agreed premium´.

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