The non-life insurance industry has decided to contract out resolution of accidental reimbursement claims to a central body to lessen losses bobbing out of large awards.
The central agency, which is the General Insurance Corporation’s subdivision, services all reports for payment owing to accidents caused by commercial vehicles. The regulator has been directed the industry to pool all gains or losses getting up motor third-party liability insurance.
Insurance Regulatory and Development Authority stated that the motor insurance pool will get into effect from April 1 and will be applicable to all commercial vehicles that would include all vehicles makes and classes.
The requirements of claims integration process are being investigated by a group headed by Dalip Verma, managing director, Tata AIG General Insurance, along with KN Bhandari, CEO, General Insurance Council and Kamesh Goyal, CEO, Bajaj Allianz General Insurance as members.
“Without the success of this motor pool, the insurance industry does not have a fighting chance of breaking even in motor third party insurance business,” Mr. Verma said.
He also added that the General Insurance Corporation of India, which would acquire the resources to manage the pool of claims, would handle the centralized claims settlement departmentally.
The total premium flowing into the commercial vehicle pool was expected to be around Rs 3,000 crore. GIC would get 2.5% of the premium, close to Rs 100 crore, for expenses. The centralized system would have several advantages compared to individual companies. For one, it would have a dedicated team that would work in the direction of early resolution of claims outside courtrooms.
The insurance council has also bordered on the courts to obtain an order, which would make it obligatory for the strategy to serve a notification to the insurance company in case of an accident.
“Centralizing claims settlement will enable the industry identify areas where accidents are high and help them work towards reducing accidents,” said Mr. Goyal.