Page 56 - The Insurance Times October 2025

received from the other petitioner M/s Om Sri premium and the liability of an insurer in relation
Vivekananda Educational Trust, Salem. to such premium for an insurance policy under sub-

7. In view of circumstances beyond control, and as the section (1) in consultation with the Insurance
Regulatory and Development Authority.”
exercise could not be effectively concluded, the Hon’ble
Madras High Court was requested for an extension of v. It is evident from the plain reading of Section 147(2)
eight weeks to pass the order. The Hon’ble Madras that any modification of premium pertaining to Third
High Court, vide order dated 04.07.2025, granted an Party insurance can only be prescribed by the Central
extension for eight weeks to pass final orders from the Government, in consultation with IRDAI.
date of its order granting the extension.
vi. In the case of TP insurance it would not fall within
8. Subsequently, notices were issued for the second time, IRDAI’s exclusive authority to make changes in the
vide letters dated 16.07.2025 to the petitioners insurance coverage or pricing. The coverage and
seeking their explanation/submission. The Authority pricing is determined and notified by the Central
received the submissions of the petitioners, vide letters Government and IRDAI’s role is only consultative.
dated 30.07.2025. vii. Following the announcement of lockdown due to
9. In compliance with the order of the Hon’ble Madras Covid-19 pandemic, the Central Government did
High Court dated 12.11.2024, the representation of the not provide any relaxation to motor vehicle
petitioners dated 04.12.2020 was examined and owners of any sector from the provisions of the MV
considering the submissions of the petitioners and the Act in respect of mandatory Motor third party
insurance companies, made through the General insurance. The Ministry of Road Transport and
Insurance Council, the Authority concludes that Highways of India (MoRTH), which notifies the
i. The current representation made by the Motor Third Party rates, did not announce any
variation in premium rates during the lockdown
petitioners cannot be viewed in isolation in terms
period.
of being applicable only to the petitioners. Any
decision on the petition will have far reaching viii. Own Damage losses covered under a motor policy
consequences on all the vehicles in the country, may occur not only when a vehicle is put to use on
owners of such vehicles and the insurance the road, but also when a vehicle is parked and
companies that have issued insurance policies for remains stationary, since insurance policies cover
such vehicles. Hence, the matter must be loss or damage due to accidental external means,
considered in its entirety, with applicability across including risks such as theft, fire, flood etc.
all geographies and segments.
ix. Although educational institutions may have been
ii. A Motor Vehicle insurance policy has two distinct closed, it cannot be assured that the buses were
sections which are priced separately i.e. Third entirely unused during the lockdown period.
Party insurance(TP) covering liability to third Unauthorized or incidental usage for maintenance,
parties and Own-Damage Insurance(OD) covering emergency transport or any other purpose could
damage, theft and loss to the vehicle itself. While still have occurred, which might have led to
TP insurance is mandatory, OD insurance is accidents. In such cases, insurers would still be
optional. required to settle claims according to the policy
iii. Motor third party insurance is mandated for all terms and conditions. It is practically impossible to
motor vehicles under Section 146(1) of the Motor verify the actual usage of each vehicle during the
Vehicles Act, 1988 (and amendments thereof) lockdown period. Additionally, in many instances
(hereinafter referred to as MV Act) . buses may have been requisitioned by authorities
for any purpose and used as per their
iv. Further Section 147(2) of the MV Act provides as
requirements.
under “Notwithstanding anything contained under
any other law for the time being in force, for the x. Under a motor insurance policy, premium is
purposes of third party insurance related to either considered for the entire period of insurance,
death of a person or grievous hurt to a person, the irrespective of the level of risk, which may fluctuate
Central Government shall prescribe a base during the entire duration of the policy.

The Insurance Times October 2025 51