Search This Blog

Sunday, December 11, 2016

HC makes some harsh comments on Insurer's (PSU) dealing MACT claims

                 Every road in every city bustles with traffic - with the increasing no. of vehicles, congested roads, speed, recklessness, urbanization, transport vehicles – accidents on the road are common place. 

Many of us have seen some accidents – death and injuries are not to be construed at medico legal phenomena alone. There are many profound psychological and social consequences apart from the death or the injuries. The sufferings can seldom be quantified in financial terms. More significant would be the horrific trauma caused to those bereaved by the sudden, unexpected snatching away of the bread winner.  Motor Insurance is compulsory ~ all vehicles on public road should compulsory have insurance – not a policy covering the vehicle or its owner but some, which are stated in the Motor Vehicles Act itself.

In days of yore, to give effective rights to the person injured or expired in an accident, Fatal Accidents Act, 1885 was enacted in India. This Act provided only a procedure and a right of named legal heirs to claim compensation from the person committing negligence. In 1939, Motor Vehicles Act, a statute consolidated the laws relating to motor vehicles. This has since been replaced by MV Act 1988.  Motor Accident Claims Tribunal [MACT] have been set up in accordance with the statute and the injured or the legal representatives of deceased can file claim application in MACT.

The Motor Vehicles Act and the setting up of MACT is considered beneficial legislation in nature – a legislation that has a broader view considering the welfare of people.  MACTs are set up for providing correct and speedy compensation to the victims of road accidents. 

Motor Insurance is compulsory and all vehicles (other than Govt vehicles) must possess valid Certificate of Insurance.  Though Motor constitutes major portfolio of most Insurers, it is loss prone too.  Over the years, the no. of accidents have risen and so did the quantum of awards.  Perhaps the premium is still not enough.  The TP premium are tariffed and regulated by IRDA.  In Apr 2011, they had issued a notification reviewing the premium rates of Motor Third party insurance covers spelling out a specific formula.  Recently (Mar 2016) it was observed that the cost inflation index (CII) had increased by 5.57% over the previous year, i.e. from 1024 in FY 2014-15 to 1081 in FY 2015-16. Subsequently the rates were revised upwards.

When there is a road accident – the injured or the legal heirs (if deceased) file petition before MACT claiming compensation against the vehicle owner impleading the Insurer also.  After due procedure, the Hon’ble Court passes award against the owner / Insurer and by virtue of Policy, Insurers effect payment of compensation.  Here is a recent instance of a MACT claim  (reported in The Hindu) – whence the Honble High Court of Madras commented that the work of Officials of Govt Insurers is detrimental to the interests of the Companies.  Here below is the news reproduced :

The Madras High Court Bench has said that it has every reason to believe that officials of public-sector insurance companies often collude with claimants in motor accident cases and let them walk away with huge amounts of money as compensation, without placing the true facts of the case before motor accident claims tribunals. This is to the detriment of the insurance companies the officials work for, the court said. Justice N Kirubakaran made the observation last Friday while passing interim orders on two appeals lodged by United India Insurance challenging an award for INR 6.67 lakhs  passed by the Tirunelveli Motor Accident Claims Tribunal in favour of two injured motorcyclists though the offending car did not have a valid insurance policy on the day of the incident, reported the local media.

“These appeals would highlight as to how the public-sector undertakings are functioning and how the officials are acting negligently and without any responsibility in a manner prejudicial to the interest of the insurance companies,” the judge said. He summoned the Chairman-cum-Managing Director (CMD) of United India Insurance to the court on 22 December to explain the "negligence and carelessness" of officials which were repeated in motor accident claim cases. The CMD was ordered to be present in the court along with details of the quantum of money that had been paid by the insurance company towards third party claims in the last 10 years. “If insurance companies are going to defend their cases in this fashion, it would cause losses to the companies which are already incurring heavy losses in respect of third-party claims running to hundreds of crores of rupees,” the judge said.

“It is also brought to the notice of this court that counterstatements are not properly prepared ... and there is collusion between some of the insurance lawyers and claimants/counsels and officials of insurance companies prejudicing the rights of those companies. This aspect has to be looked into very seriously. “This court has every reason to believe that even the officials of the insurance companies are not properly giving instructions and are defending the case with design. This kind of failure or negligence should be curtailed or prevented.”

Insurance policy:  During the course of the hearing, the judge said it was difficult to comprehend how the insurance officials could not have brought up the fact that the car lacked a valid insurance policy on 5 January 2014 when the accident occurred on Tirunelveli-Kovilpatti Main Road though the car owner had renewed the expired insurance policy on 7 January. He pointed out that the tribunal had directed the insurance company to pay INR5.59 lakh to the injured motorcyclist and INR1.08 lakh to the pillion rider only in the belief that the car had a valid insurance on the date of accident. Otherwise, the owner of the car would have been directed to bear the liability of paying the award amount.

The vehicle had hit the motorcycle, injuring both the rider and the pillion rider. The insurance company had denied all allegations, except regarding the insurance policy. This showed how negligently the insurance company officials acted without responsibility, the court said. "There is no collection of materials to defend the case of the insurance company whether the vehicle is insured." Utmost care must be taken to defend the cases when the claim filed involved hundreds of thousands of rupees, the court said.

With regards – S. Sampathkumar
11th Dec 2016.

1 comment: