2. MOTOR INSURANCE HISTORY
First started in U.K.
1894- first motor car was introduce in U.K.
1895 – first motor car insurance introducing in U.K.
For T.P.
1899 – comprehensive policy covering accidental
damages to the car was introduce.
1903 – car & general insurance corp. Ltd. Was
established to transact motor insurance followed by
other cos.
3. MOTOR INSURANCE HISTORY
In India M.V. Act was passed in 1939 making law for
compulsory T.P. Insurance.
It was governed by tariff till march-2008.
Practices of motor insurance in India follows U.K.
Market.
M.V. Act 1939 was replaced by M.V. Act – 1988(act
no.-59 of 1988 act) & was made effective from
01.07.1989.
4. WHAT IS MOTOR
INSURANCE?
MOTOR INSURANCE IS A COMBINATION OF
TWO WORDS I.E. ‘MOTOR + INSURANCE’
MOTOR UNDER THE MOTOR VEHICLE ACT IS A
SELF-PROPELLED VEHICLE
INSURANCE WE ALREADY KNOW IS
PROTECTION AGAINST ANY ‘UNFORESEEN
RISK’
THE ‘UNFORESEEN RISK’ IS AN INCIDENT,
WHICH CAN’T BE FORESEEN I.E. WHICH MAY
OR MAY NOT HAPPEN I.E.
5. WHAT IS MOTOR
INSURANCE?
A) IT MAY RESULT IN TO EITHER CREATION OF LIABILITIES
OR
B) WILL RESULT IN TO FINANCIAL LOSSES:
INJURIES/DEATH TO PERSON/S AND
DAMAGE TO PROPERTY.
(LIABILITIES)
DAMAGE TO THE VEHICLE ITSELF AND
THEFT OF PARTS OR THE THEFT OF THE
VEHICLE ITSELF.
(FINANCIAL LOSSES)
6. TYPES OF POLICIES
THE POLICY WHICH IS MANDATORY TO BE
TAKEN IN ORDER TO MEET THE REQUIREMENT
OF THE MOTOR VEHICLE ACT IS, ‘LIABILITY
ONLY POLICY’ AND
THE SECOND POLICY IS THE CHOICE OF THE
OWNER OF THE VEHICLE I.E. HE MAY OR MAY
NOT TAKE THIS POLICY, KNOWN AS,
‘PACKAGE POLICY’.
7. INTRODUCTION
GLOBALLY MOTOR INSURANCE IS THE BIGGEST
AND FASTEST GROWING GENERAL INSURANCE
PORTFOLIO AND INDIA IS NO EXCEPTION TO IT.
IT ACCOUNTS FOR MORE THAN 45% OF THE TOTAL
GENERAL INSURANCE PREMIUM INCOME IN INDIA
IN THE YEAR ENDING 2012, TOTAL NONLIFE
PREMIUM OF THE INDUSTRY WAS ABOUT 58,326
CRORES OUT OF WHICH MOTOR SHARE WAS
ABOUT 24,156 CRORES
HOWEVER MOTOR BUSINESS WAS 25 CRORES ONLY
AT THE TIME OF NATIONALIZATION.
8. Segment- Wise gross Non - life Insurance premium for the last
seven financial years, i.e. from 2005 - 06 to 2011 -12
(GDP : INR crores) (Unaudited & Tentative)
Segment
2005-06
200607
2007-08
200809
200910
201011
2011-12
Fire
3750
4163
3505
3436
3945
4644
5535
Cargo
783
886
1041
1156
1264
1544
1846
Hull
513
748
779
836
923
997
1003
Engg.
975
1374
1433
1574
1679
1908
2296
Motor OD
6122
7580
8083
8379
9445
11761
14336
Motor TP
2644
3098
4714
5105
5784
6363
9820
Health
2222
3210
5110
6634
8338
11145
13325
Aviation
405
417
304
365
410
462
481
Liability
397
464
606
715
864
1022
1237
PA
580
619
791
923
953
1140
1374
Others
2619
3074
3351
3629
4786
5996
7098
Total
21010
25634
29718
32751
38391
46999
58326
10. INTRODUCTION
SOME OF THE FACTORS RESPONSIBLE FOR THIS
GROWTH ARE:
INCREASE IN EARNING CAPACITY OF INDIVIDUAL
CHANGE IN PRIORITIES OF LIFE
EXPLOSIVE GROWTH OF AUTOMOBILE INDUSTRY
NEWER MODELS BEING INTRODUCED IN INDIA
AND IN THE WORLD, THE COSTLIER ONES AND
THE CHEAPEST VERSIONS AND
INTRODUCTION OF CHEAP AUTO LOANS.
13. GROWTH
IN 1951, THERE WERE 3,00,000 MOTOR VEHICLES
THROUGHOUT INDIA
THE ROAD NETWORK AT THAT TIME WAS OF
4,00,000 KILOMETERS
BY THE YEAR ENDING 2011, THE NUMBER OF
VEHICLES HAS GONE UP BY 472 TIMES, WHERE
AS
ROAD NETWORK HAS EXPANDED BY 11 TIMES
ONLY.
14. GROWTH
IN INDIA THE VEHICLE POPULATION HAS
ALREADY CROSSED 14 CRORES COMPRISING OF
THE FOLLOWINGS:
TWO WHEELERS: 9 CRORES
MOTOR CARS : 3 CRORES
COMMERCIAL : 2 CRORES AND
ABOUT 90 LAKH MOTOR VEHICLES (ALL TYPES)
ARE BEING ADDED ON INDIAN ROADS EVERY YEAR
15. ACCIDENTS
ABOUT 300 PERSONS ARE BEING KILLED ON ROAD
ACCIDENTS DAILY AND ABOUT 10,00,00 ARE BEING
INJURED ANNUALLY AND
THE INCIDENCE OF ROAD ACCIDENTS TO NUMBER OF
VEHICLES IN INDIA IS ALARMINGLY HIGH IN
COMPARISON TO DEVELOPED COUNTRIES:
THE NUMBER OF ROAD ACCIDENTS PER 10,000
VEHICLES IN INDIA IS ABOUT 120 AS AGAINST 10 IN THE
DEVELOPED COUNTRIES OF THE WORLD
THE NUMBER OF DEATHS PER 10,000 VEHICLES IN INDIA
IS 55 AS AGAINST 2 IN THE WEST.
16. ACCIDENTS
IN 1990, TRAFFIC ACCIDENTS WERE WORLD’S
NINTH BIGGEST CAUSE OF DEATH AND IT IS
EXPECTED TO BECOME THE THIRD BIGGEST BY 2020.
STUDY UNDERTAKEN BY THE ‘WORLD HEALTH
ORGANIZATION’ REVEALS THAT ROAD ACCIDENTS
ARE THE SECOND AND
THIRD BIGGEST CAUSE OF DEATH IN THE AGE
GROUP OF 5-29 AND 30-44 YRS. RESPECTIVELY.
THE INDIAN SITUATION IS AMONGST THE WORST
IN THE WORLD I.E.
SHARE OF ROAD FATALITIES IS AROUND 86%.
AGAINST 40% SHARE OF VEHICLE POPULATION.
17. ACCIDENTS
During the calendar year 2010, there were close to 5
lakh road accidents in india, which resulted in more
than 1.3 lakh deaths and inflicted injuries on 5.2 lakh
persons. Thses number translates into one road accident
every minute, and one road accident death every four
minutes.
-MINISTRY OF ROAD TRANSPORT AND
HIGHWAYS
19. IMPLICATIONS
IT IS THEREFORE NATURAL THAT IN A
SITUATION LIKE THIS I.E. THE WIDESPREAD
USE OF VEHICLE BY THE COMMON MAN
MANY VEHICLE OWNERS AND USERS MAY
NOT HAVE THE REQUISITE FINANCIAL
CAPABILITIES OF
COMPENSATION TO THE VICTIMS OF THE
ROAD ACCIDENT.
20. REMEDIES
THE MOTOR VEHICLE ACT HAS THEREFORE MADE
THE THIRD PARTY INSURANCE COMPULSORY
IT IS A PUNISHABLE OFFENCE TO USE THE
VEHICLE WITHOUT INSURANCE
NECESSARY PROVISIONS FOR ITS ENFORCEMENT
ARE THEREFORE ARE AVAILABLE WITH THE
AUTHORITIES:
FAILURE TO COMPLY THE PROVISIONS OF SEC.146
OF THE MV ACT IS PUNISHABLE BY AN
IMPRISONMENT OF THREE MONTHS OR A PENALTY
OF RS. 1000 OR BOTH (SEC.196 OF THE MV ACT).
21. MANDATORY
INSURANCE
THE MANDATORY PART OF THE MOTOR
INSURANCE IS KNOWN AS
‘THIRD PARTY INSURANCE’
THIS INSURANCE WAS FORMED ON THE BASIS
OF MOTOR VEHICLE ACT
THE POLICY IS BEING ISSUED IN
ACCORDANCE WITH THE PROVISIONS OF THE
M. V. ACT, IS NOW CALLED AS THE ‘LIABILITY
ONLY POLICY’ & THE COVERAGE’S PROVIDED
ARE:….
22. LIABILITIES TO THIRD
PARTY
DEATH OF OR BODILY INJURY TO ANY PERSON
INCLUDING OCCUPANTS (PROVIDED SUCH
OCCUPANTS ARE NOT CARRIED FOR HIRE OR
REWARD) AS PER MOTOR VEHICLES ACT, 1988.
THE COMPANY SHALL NOT BE LIABLE FOR DEATH
OR INJURY ARISES OUT OF AND IN THE COURSE OF
THE EMPLOYMENT
DAMAGE TO PROPERTY OTHER THAN PROPERTY
BELONGING TO THE INSURED OR HELD IN TRUST/
CUSTODY OR CONTROL OF THE INSURED
ALL COSTS AND EXPENSES INCURRED WITH ITS
WRITTEN CONSENT.
23. Comprehensive Policy:
Coverage
Loss or Damage to your vehicle against Natural Calamities
Fire, explosion, self-ignition or lightning, earthquake, flood,
typhoon, hurricane, storm, tempest, inundation, cyclone,
hailstorm, frost, landslide, rockslide.
Loss or Damage to your vehicle against Man-made Calamities
Burglary, theft, riot, strike, malicious act, accident by external
means, terrorist activity, any damage in transit by road, rail etc.
Personal Accident Cover
Coverage for the individual driver of the vehicle while travelling,
mounting or dismounting from the car. Optional personal accident
covers for co-passengers.
Third Party Legal Liability
Protection against legal liability due to accidental damages
resulting in the permanent injury or death of a person, and
damage caused to the surrounding property.
24. Comprehensive Policy:
Exclusions
Normal wear and tear and general ageing of the vehicle.
Depreciation or any consequential loss.
Mechanical/ electrical breakdown.
Wear and tear of consumables like tyres and tubes unless the
vehicle is damaged at the same time, in which case the liability
of the company shall be limited to 50% of the cost of
replacement.
Vehicles including cars being used otherwise than in
accordance with limitations as to use.
Damage to/ by a person driving any vehicles or cars without a
valid license.
Damage to/ by a person driving the vehicle under the influence
of drugs or liquor.
Loss/ damage due to war, mutiny or nuclear risk
25. TYPES OF VEHICLES
THE INDIAN MOTOR TARIFF REVISED W.E.F. 1ST
JULY 2002, FOR THE PURPOSES OF INSURANCE
HAS CLASSIFIED THE MOTOR VEHICLES
BROADLY INTO THREE CATEGORIES WITH
FURTHER SUB CLASSIFICATION VIZ.
PRIVATE CARS
MOTORIZED TWO WHEELERS AND
COMMERCIAL VEHICLES.
29. CLAIMS
TYPE OF LOSSES:
TOTAL LOSS (ACCIDENTAL)
WHEN INSURED VEHICLE IS DAMAGED TO THE EXTEND THAT
REPAIRS IS UNECONOMICAL TO THE COMPANY OR COST OF
RETRIEVAL EXCEEDS THE IDV.
IF ASSESSED VALUE OF THE LOSS EXCEEDS 75% OF IDV
TOTAL LOSS (THEFT)
WHEN PHYSICAL PRESENCE OF VEHICLE IS NOT THERE I.E.
VEHICLE IS STOLEN.
PARTIAL LOSS (ACCIDENTAL)
REPAIRABLE LOSS OCCURRING DUE TO AN INSURED PERIL.
PARTIAL LOSS (THEFT)
THEFT OF PARTS/ ACCESSORIES.
ACCESSORIES COVERED ONLY IN PRIVATE CARS.
30. CLAIM PROCEDURE
IMMEDIATE NOTICE OF LOSS IN WRITING TO
BE GIVEN
FOR ACCIDENTAL LOSSES, ESTIMATE OF
REPAIRS AND CLAIM FORM TO BE SUBMITTED
FOR LOSS DUE TO THEFT OF VEHICLE,
A COPY OF F.I.R. ALONG WITH A CLAIM FORM
TO BE GIVEN
TO APPOINT A SURVEYOR FOR ASSESSMENT
OF LOSS/ AN INVESTIGATOR TO INVESTIGATE
THE THEFT…..
31. CLAIM PROCEDURE
ORIGINAL R/C, D/L TO BE PRODUCED
REPAIRS CAN BE STARTED IN CASE OF PARTIAL
LOSS, AFTER INITIAL VERIFICATION BY
SURVEYOR’S
CLAIMS ARE SUBJECT TO COMPULSORY EXCESSES
IN CASE OF TOTAL LOSS, LIMIT OF LIABILITY WILL
BE IDV
ANY DISPUTE REGARDING ‘QUANTUM’ OF CLAIM
AMOUNT HAS TO BE REFERRED TO AN
ARBITRATOR
TIME LIMIT FOR FILING A SUIT AFTER DISCLAIMER
IS 12 MONTHS FROM DATE OF SUCH DISCLAIMER
