As per data secured by General Insurance Council (GIC), 60% of vehicles that ply on Indian roads are not insured and a significant majority of these vehicles are two-wheelers – scooters and bikes.
Reportedly, a survey conducted by General Insurance Council (GIC) has revealed that 60% of vehicles that ply on Indian roads are uninsured, out of which most of them are two wheelers. General Insurance Council has been established in the year 2001, as per Section 64C of the Insurance Act, 1938, and is authorized by IRDAI (Insurance Regulatory and Development Authority of India). GIC acts as a bridge between IRDAI and the general insurance industry in India. It surveys the insurance market in the country and reports the concerns to the government. Its objective is to improve the growth of the Indian insurance industry for the welfare of the involved stakeholders.
The vehicular population in India comprises of a mix of private and commercial cars, buses and majorly two wheelers, with the latter recording a whopping 76% (approx.) of the traffic. These two wheelers account for 34% of accidental deaths, as per a report by the Ministry of Road Transport and Highways.
The data by GIC and the Ministry of Road Transport and Highways is discouraging as it highlights the appalling situation of the insurance sector in India, despite third party insurance being mandatory by the law for all vehicles registered in India. The Motor Vehicles Act 1988, makes it mandatory for owners of registered vehicles in India to purchase at least a third party liability cover, if not a comprehensive motor insurance cover. The inability to comply with this law attracts a penalty of Rs.1,000 and/or 3 months imprisonment. Not just these data, there is more to support the fact that vehicle owners in India, more specifically two wheeler owners, do not realize the significance of a motor insurance. A third party insurance enables owners of a vehicle to make a claim as a compensation for the injury or death caused to a third party by his/her insured vehicle during a road accident.
Reportedly, in 2012 - 13, a mere 6.02 crore out of the total 15 crore registered vehicles were insured. The insurance industry did not witness any improvement even a couple of years later, despite consistent efforts of GIC. From 19 crore registered vehicles in 2015 – 16, only 8.26 crore were insured. The immediate need to improve the scenario is to make more stringent efforts to enforce the law. Additionally, the penalty for not abiding by it also needs to be increased to come down on vehicle owners with an iron hand. Therefore, the decision by the Motor Vehicles (Amendment) Bill to double the existing penalty from Rs. 1,000 to Rs. 2,000 is a step towards the right direction. More such steps need to be taken to implement the law and see an improvement in the number of purchases of motor insurance policies among all vehicles, especially two wheelers.