May 29, 2022, 5:16 pm

Staff Correspondent

2021-11-02 12:22:22 BdST

IDRA moves to revive third-party insurance raising compensation packages

The Insurance Development and Regulatory Authority (IDRA) has started off with restoring the abolished third-party insurance policy by increasing the amount of road accident compensations.

A five-member technical committee headed by IDRA Executive Director SM Shakil Akhter has been formed in this regard.

The committee has proposed Tk 5 lakh in compensation for death by an accident, Tk 3 lakh for serious injuries, Tk 1 lakh for slight injuries, Tk 2 lakh for property damages of the victim.

In the abolished policy, the compensation for a dead victim was Tk 20,000, and that for an injured one Tk 5,000-Tk 10,000.

The third-party insurance compensates a person injured or killed in a road accident.

It also covers any damage done to any property or vehicle in the accident.

A draft report prepared by the committee says insurance premium in the re-launched policy will be determined considering vehicle types.

It says insurance companies will be obliged to pay compensations if someone is injured or killed in a road accident, but they must be notified in writing promptly after the accident.

Besides, the insured will take all reasonable steps to keep the vehicle in efficient condition while the insurer will always have free and full access to examine the vehicle or any part of it or any driver or employee of the insured.

The insurer may cancel the policy by sending a seven-day notice through a registered letter to the last known address of the insured.

Moreover, if the claimant is covered by multiple policies for such incidents, the insurer will not be liable to pay or contribute more than its ratable proportion of compensation or expense.

The IDRA executive director said the third-party insurance is mandatory in almost all countries around the world, and it is important to make it compulsory in Bangladesh as well.

This is because the existing insurance policies do not compensate for the injury or death of a pedestrian in an accident, which is really sad, he observed.

The IDRA is working on how to re-launch and make the third-party insurance mandatory with new services.

Why the previous policy was abolished

After the enactment of road transport act 2018, the insurance regulator in a circular in December last year instructed the insurance companies to scrap the third-party insurance.

The instruction was given as the policy did not cover the third party or the vehicle involved in the accident or property damage.

Stakeholders for re-launching the policy

According to the stakeholders, scrapping the third-party insurance was depriving pedestrians of accident compensations.

They said this insurance is compulsory, but not comprehensive, all over the world.

But it is not logical to make comprehensive motor insurance compulsory for all considering people’s financial capabilities, they opined.

India has such a policy, and it was unreasonable to abolish it in Bangladesh, they added.

AKM Ehsanul Haque, a director of Sadharan Bima Corporation, said the third party is helpless, thereby facing serious risks as they are not covered by any insurance.

“Who will take the responsibility if a pedestrian unexpectedly dies in a road accident?” he posed a question, adding that the insurance companies did not pay compensations under the abolished policy, but it was not a logical decision to do away with it without making alternative arrangements.

“The policy should be re-launched and made compulsory.” Bangladesh Insurance Association president Sheikh Kabir Hossain said how the policy would be re-launched is important.

The abolished policy offered no benefit to the insured, and that is why some advantages should be offered if it was re-launched, and the IDRA could also consider renaming the policy, he suggested.

Bangladesh Jatri Kalyan Samity Secretary General Mozammel Haque Chowdhury said the amount of damage caused to a third party in a car accident is close to 1 percent of the country’s gross domestic product or over Tk 12,000 crore.

As the third parties are deprived of such a large amount of compensation, it is the responsibility of the state to address this, he said.

But as the state does not have a fund to compensate these victims, insurance companies should pay this compensation like that in the neighbouring countries, he said.

“We thought the new road transport act would ensure this compensation. But we saw that policymakers had misled the government and got the third-party insurance abolished, depriving the third parties of compensation,” he said.

“I think the policy needs to be re-launched, and the third parties should be given legal protection,” he added.

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