Motor Vehicle Act has a number of issues which need to be rectified
Mumbai: The insurance sector is eagerly waiting for the Insurance Law (Amendment) Bill, 2008 to be passed by the parliament which will also give greater clarity to a few issues in the Motor Vehicles (MV) Act, 1988 besides addressing a number of other issues raised by the sector.
Firstly, the terms and conditions of third party claim mentioned in the MV Act are very vague which indirectly hampers the revenue of a number of insurance companies. According to the Act, a victim can file a legal Motor Accident Claims Tribunal (MACT) claim in any MACT court in India. For e.g. if an accident has taken place in Mumbai and the victim has purchased a policy from Mumbai, he is eligible to file a legal claim in the Gujarat MACT court. The companies have requested for an amendment which states that there has to be some geographical definition - either it can be the place where the victim is residing or where the accident has occurred.
Secondly, the act mentions that there is no time limit for filing the claim. “A person can file the claim even after 20 years of the occurrence of the accident. Such claims made after a long period of time take the insurance companies by surprise,” said K G Krishnamoorthy Rao, Managing Director and CEO, Future Generali India. The ‘Law of Limitation’ that prescribes the time-limit for different suits is not applicable in this sector.
The third issue in the Act is that there is no cap to motor liability. If the new norm which is expected to be functional by the end of this year comes in place, the third-party claims for road accidents will be capped at Rs 10-15 lakh. Currently, a judge can award any amount to the victim. Ergo, the companies have requested for an amendment to put some specific limit to the claims. Under all other types of accidents, be it rail or air, there are specified limits.
The companies expect these issues to be considered by the parliament and are waiting for a nod from the authority.