The Insurance Information Bureau (IIB) of India recently unveiled its yearly report for 2018-19, revealing some concerning statistics about the state of vehicle insurance in the country. The IIB was established by the Insurance Regulatory Development Authority of India (IRDAI) in 2009 to cater to the needs of the insurance industry.
Key Findings: Uninsured Vehicles and Enforcement
In a remarkable revelation, the report states that nearly 57% of all vehicles on Indian roads were uninsured as of March 2019. This is an increase from 54% in March 2018. Two-wheelers form the majority of these uninsured vehicles with a staggering figure of 66%. As per the Motor Vehicles Act of 2019, it is mandatory for all vehicles to be insured with a third-party vehicle insurance policy.
However, due to weak enforcement by traffic police, lack of persistence from insurers, and the rising cost of third-party covers, a large number of vehicle owners are evading the renewal of their motor insurance policy.
Concerns: Lack of Mandatory Insurance and Compensation
It is alarming that approximately 132 million vehicles in India are operating without the mandatory third-party insurance covers. This presents a considerable risk since victims of accidents caused by these vehicles will not receive adequate compensation, as there isn’t any one insurance company to assume liability.
Annual Report on Road Accidents in India
According to the annual report on Road Accidents in India, released by the Ministry of Road Transport and Highways in 2019, the country witnesses almost 150,000 road-accident-related deaths every year. Despite a decrease in accidents and accident-related fatalities between 2010-2018, the severity of road accidents increased by 0.6% in 2018 compared to 2017. Over-speeding accounted for 64.4% of the fatalities, and two-wheelers were involved in 35.2% of all accidents in 2018.
Global Initiatives: The Brasilia Declaration on Road Safety
Recognizing the global severity of road traffic accidents, countries converged at the second Global High-Level Conference on Road Safety in Brazil and signed the Brasilia Declaration on Road Safety in 2015. The initiative aims to halve the amount of global deaths and injuries from road accidents by 2030.
The Way Forward: Technology and Awareness
India is one of the most significant auto markets globally, selling over 20 million vehicles annually. Given the high number of road accidents and fatalities, it is concerning that more than half of the country’s vehicles are uninsured. While insurance cannot mitigate accidents or deaths, it can lessen financial losses and assist in post-accident recovery.
Spreading awareness about insurance and improving financial literacy, especially regarding the concept of insurance, is crucial. The application of technology in insurance also requires regulatory scrutiny. Regulators must ensure that insurance is accessible to lower-income people, simplify the online insurance purchasing process, and prevent companies from overcharging or adding hidden costs.
