MOTOR INSURANCE

PRESENTED BY- RAMZAN SHAH MS INSURANCE, NLU, JODHPUR

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.

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.

MOTOR INSURANCE - HISTORY

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.

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)

WHAT IS MOTOR INSURANCE?

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’.

TYPES OF POLICIES

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.

INTRODUCTION

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

2006-07

2007-08

2008-09

2009-10

2010-11

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

SEGMENT WISE NON LIFE PREMIUM

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.

INTRODUCTION

COSTLIEST CAR IN INDIA

CHEAPEST CAR IN INDIA

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.

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

GROWTH

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.

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.

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

ACCIDENTS

World’s Costliest Car-Bugatti Veyron

Before and after the accident

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.

IMPLICATIONS

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).

REMEDIES

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:….

MANDATORY INSURANCE

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.

LIABILITIES TO THIRD PARTY

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.

Comprehensive Policy: Coverage

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

Comprehensive Policy: Exclusions

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.

TYPES OF VEHICLES

PRIVATE CARS

TWO WHEELERS

COMMERCIAL VEHICLES

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.

CLAIMS

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…..

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

CLAIM PROCEDURE

THANKS