Around 57% of vehicles in India uninsured

MUMBAI: Weak enforcement by traffic police in states, lack of follow-up by insurers and rising cost of third-party covers has resulted in a larger number of vehicle owners not renewing their motor insurance policy. According to a report by the Insurance Information Bureau, the ratio of uninsured vehicles on Indian roads has gone up by three percentage points from 54% in FY18 to 57% in FY19.

Of the over 23 crore vehicles on road in India as on March 31, 2019, the percentage of uninsured vehicles was at nearly 57%. This means that about 13.2 crore vehicles on Indian roads are plying without the mandatory third-party insurance covers. Victims of accidents caused by these vehicles will not get adequate compensation as there would not be any one insurance company on which the liability can be pinned. The owners, too, have limited means to provide compensation.

According to the report in FY18, of the nearly 21.1 crore vehicles on road, 54% — or just 11.4 crore — vehicles were uninsured. In one year, the number of non-compliant vehicles has risen by almost 2 crore. The bulk of the uninsured are two-wheelers, which account for 75% of the vehicles on Indian roads, with the un-insurance being as high as 66%. There are 15 states with over 60% of their vehicles uninsured. The southern states fare better in terms of compliance.

According to insurers, it is possible for state governments to identify the uninsured vehicles as there is a database of insured vehicles. However, the problem is with enforcement. In Maharashtra, the state government this week decided to start recovering fines in cash after unpaid e-challans crossed Rs 600 crore.

For insurance companies, the low level of compliance results in a higher claims ratio as, on several occasions, the tribunals have held the insurers liable for compensation, asking them to recover from the insured.

The average settlement amount for death claims in FY2018-19 was Rs 9,01,207 and for injury claims it was Rs 2,51,094. This number has been growing year on year as it has been linked to income and inflation levels. Insurers, in turn, pass on the higher premium to vehicle owners in the form of costlier third-party liability cover, making the policies less affordable.

Source: The Times of India