New Delhi, Oct. 28: The Insurance Regulatory Development Authority (IRDA) today directed all insurance companies to insure commercial vehicles, regardless of their age.
The directive comes after a meeting today between IRDA officials and the truckers’ associations who have been on the warpath after insurance companies refused to insure vehicles more than seven years old and raised insurance premia several fold.
IRDA also decided insurers can hike premia by a maximum of 100 per cent in the first year on the basis of various factors like age of the vehicle, track record of traffic offences and further increase this to 200 per cent in the following year.
Gurinder Pal Singh, vice-president of the All India Motor Transport Congress (AIMTC), a truckers’ union which has been negotiating with IRDA, said, ”The regulator has promised to take strict action against insurers who choose to violate rules and regulations”.
In a letter written to the IRDA earlier this month, the AIMTC had complained that insurance companies refuse to write third party covers for vehicles that are more than seven years old. AIMTC had also alleged that the insurers are also not writing own damage insurance or comprehensive insurance cover for vehicles more than five years old. “This has affected the re-sale market and is ultimately going to affect the replacement market,” says the letter.
“No insurance company can do such a thing legally but it is true that insurance companies are trying to discourage insuring old commercial vehicles,” an official from one of the private general insurance companies said.
“Motor insurance has become a loss-making business mainly due to losses incurred in insuring older commercial vehicles,” the official added.
Among other complaints, the transporters have accused insurers of loading the premium on vehicles by 300 per cent to 400 per cent, though IRDA guidelines only allow a maximum 100 per cent in the first year and subsequently 200 per cent in the following year. “The insurance companies are flouting the guidelines of the regulator,” the truckers said in the letter.
“We are ready to go on an indefinite all-India strike from November 15 if the insurers do not stop hiking their unreasonable premium,” Singh said.
AIMTC again reiterated the need to form a co-operative society to undertake insurance of their vehicles. It has requested the regulator to relax the condition of capital outlay for such co-operatives to Rs 1 crore from Rs 100 crore set for the insurance companies. No firm decision on this account was taken today. “The proposal is still under the IRDA’s consideration,” Singh added.