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Why you won’t get insurance
for your old vehicle? |
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Unlike earlier times, you may not be able to get
comprehensive cover for your over-seven year old commercial vehicle anymore.
And if you are the proud owner of either a Qualis, Sumo Lancer, Palio or an
Indica, be known that your chances of getting a risk cover from the new private
insurers is simply out of question.
The reason is, third party claims are going over 130 per cent - the bane of the
non life insurance sector which is why general insurance companies have
unanimously decided not to henceforth issue comprehensive covers for vehicles
more than seven years old. While state owned non-life insurers bled all these
years, the experience of private non-life insurers who flagged off their
business only recently, is also no different.
With claim ratios crossing 90 percent, private insurers are getting
increasingly selective while underwriting motor policies. They issue risk
covers only for new vehicles but surprisingly covers are not being issued for
the Qualis, Tata Sumo, Palio, the Lancer etc - vehicles that are reportedly
being used as private taxis.
Some private insurers have altogether shut down their non-life business due to
mounting losses. ICICI Lombard suffered huge losses with claim ratios going
upto 120 percent and it is now reworking its strategies.
State owned insurers have found that providing comprehensive cover for old
vehicles is a loss-making proposition. This is because car owners in a number
of cases deliberately crashed their old vehicles only to claim insurance money.
Also with high cost of spare parts it was not feasible to continue with the
present system of coverage. The government, to save the already ailing non-life
sector, initiated the new tariff policy, but its implementation has been
postponed to June, which has further worsened the situation.
Now private insurers have initiated stringent scrutiny of proposals by checking
for past claims experience of the policyholder among others before issuing risk
covers. Also policy documents are worded carefully and the fine print
henceforth will carry more deductibles than before in order that the
policyholder does not in anyway financially benefit out of insurance but is
only appropriately indemnified for the loss incurred. |
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Discounted Sale of Vehicle
Policies |
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Heavy discounts are offered up to 65 percent on premiums
to entice renewal of comprehensive motor policies. But there is no merit in
this move. Obviously, the industry which is actually reeling under heavy odds
cannot afford this. It is in the interest of the industry and the insuring
public to dispense with this luxury. It is time the industry addressed this as
an internal reform of the present premium structures.
It is a considered opinion that the Motor Insurance portfolio is prone to
losses and the attempts of the industry at increasing the premiums to balance
the portfolios is thwarted by the 'authorities' with advice that the insurance
Companies must manage their operations efficiently without resorting to price
hike.
Hence it appears illogical for the insurance companies wanting to increase the
prices on one hand and offer discounts in premiums without being obliged to do
so. The insurance industry should take into consideration and canvass the
following aspects to strengthen their hands in favour of withdrawing the
discounting practice.
Discount sale of the policies is only on renewals and this does not bring in
any fresh business. The discounts continue to be offered even if the renewal is
not with the same company and there is no advantage.
An insured who has not preferred a claim should be rewarded is against natural
justice. A valid claim is out of an unfortunate event and not out of willful
act of the insured. An insured is penalised for his preferring a claim which is
due to pure accident.
Careful driving is an implied condition and there need not be any rewards for
it. If careful driving should be rewarded, any person with a valid driving
license can drive a car and the contribution of the insured is nil with regard
to careful driving. Then why is the insured rewarded with discounts? The
discount is offered to the insured though personal element has disappeared.
Discounts have various adverse effects also. When the insured insists upon
earning the discount, he will omit to report an accident to the insurer as
required of him by the very first condition of the Insurance contract since he
may loose the discount and continue to use the car without carrying out repairs
and damage may be accumulated.
By not reporting the accident, he may even precipitate matters in case of third
party claims which may be too late for the insurers to deal with. In case of
knock for knock agreements, if the insured using the car is not to be blamed
for the accident he gets his claim paid and also enjoys the discount in
premiums.
Nowadays, cars are fitted with plastic accessories wherever practical. These
being fragile, higher percentage of depreciation ought to have been charged as
was practiced earlier. Instead, depreciation itself is withdrawn deviating from
the principle of Indemnity and the claims can be said to be subsidised.
The sum insured is selected by the insured and the market values are not
insisted upon for premium payments. He gets away without no penalty for
under-insurance and the full claim amount is paid in case of partial losses.
Extra premium should be charged on the amount of the loss to reinstate the sum
insured.
It is true that there will be a spurt in the claims when the discounting system
is withdrawn. The solution lies in introducing policy excess. It seems strange
that almost all the policies are subject to policy excess but not motor
insurance. There are no policies without deductibles in other countries. In
case, withdrawal of discount would give undue advantage to habitual claimants,
then the claimant should be considered as a moral hazard and renewals
considered on merits.
It is viewed that if the discount system is vitiated there should be
improvement in premium and claims ratio for the comfort of the Insurance
Companies in managing their Motor portfolio and it may go to the benefit of the
entire insuring public too as it may result in overall reduction of premium
structures as a long term planning. |
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Has your car been stolen? No need to worry |
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You parked your car as usual in the parking lot. When
you returned you were in for a big shock. Your car was missing. Panic-stricken,
thoughts of the gaping hole it may leave in your pocket, envelope your mind.
Not quite - if you have adequate insurance for your vehicle.
Following is the claims procedure to be followed under such situations:
When you realise your vehicle has been stolen, inform the police immediately.
Also inform your insurance agent.
Chances are you may have also lost your Registration Book too (if you carried
it in your vehicle always). In such a case obtain a duplicate one from the
Transport Authorities immediately.
Keep in touch with the nearby police to know the progress of the investigation.
If your vehicle has not been traceable for a reasonable period of time get a
report from the police stating so.
Once your vehicle is traced immediately inform the insurance company.
Requirement For Claims:
Intimation and policy.
Filled in challan form.
FIR copy.
Untraced report.
Intimation to RTO about theft.
If RC is stolen along with the vehicle, applications to RTO for a duplicate.
Consent letter.
Discharge voucher from the authorised signatory.
Letter of indemnity and subrogation on stamp paper of Rs.10/-.
Ignition keys. |
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