Page 24 - Insurance Times November 2021

2002-03 to 2019-20. Has it also changed the profile of the huge margin. Though it depends on facts of specific case, it
road accident victims? If so what is the extent of such is observed in many cases the consideration of prospective
changes? In the absence of relevant factual data, it is income in calculation of dependency has the effect of more
difficult to get a fully satisfactory answer to this question. than doubling the amount of compensation.
However, again, people keeping track of demographic
developments during the period of analysis will agree that B. Concept of "Pay and Recover"
the said profile, from the point of view of third party Earlier, a breach of policy condition by the insured, discharged
insurance liability is not likely to have changed significantly the insurers from the liability. But under this concept of 'pay
and might not have been responsible for the huge increase and recover' insurers are asked to first pay the compensation
in premium rates. Even if there is some impact, it might be to the petitioners and subsequently recover the said amount
in a small measure. The profile of victims being a chance from the insured. Chances of recoveries being remote,
factor (there can not be a selection), statistically it must have insurers end up with this additional burden.
remained same.
C. Enhanced Scope of Compensation for Loss of
Assuming the effect of factors mentioned above under sub-
Consortium
titles "legal provisions" and "profile of the victims" to be
Compensation for loss of consortium which was traditionally
minimal, we have to probe further to seek an explanation /
restricted to spousal consortium is now extended to parental
answer to our issue of 10/11 times increase caused by consortium (to a child dependent) and filian consortium (to
factors other than inflation and incidence.
a parent dependent).
c) Security content reflected in Judgements In the absences of any other verifiable reasons, the impact
(in liberal interpretation of legal provisions, as well as in of this judicial trend (apart from inflation) appears to be the
definig the security in terms of amount of compensation, main reason for the rising claims experience. Thus under the
independent of inflationary content) circumstances analysed in the preceding paras, it can safely
be concluded that the hefty increase in the premium rates
This security mechanism is in place for last several decades. attributed to the category of quantum of relief (if not all, a
The working of amount of compensation payable to the major portion of 10/11 times change referred above) is most
victims of road accidents has seen several improvements. likely, due to the a two new concepts referred above
The compensation is not a consolidated amount. It is a sum representing expanding social and security quotient of
of amounts logically worked out separately under different judicial pronouncements of learned judges. Some of it might
identified heads. And amount payable under each head is have been contributed by increasing mounts awarded on the
determined by the judiciary on what judges deem to be just traditional heads of compensation. Impact of the legal
and adequate under the prevailing conditions. In a changing provisions mentioned in one of the previous point, might,
society, with the passage of time, the notions of justness and as stated, not be significant, yet whatever little impact they
adequacy have also changed. Over the years, liberal must have had, is again all about the social and security
compensations are granted. Apart from the liberal approach content impact only.
in terms of amount under each identified traditionally
accepted heads, some new heads (which were not Concluding Remarks
recognised earlier) of compensation and improvised Statistical technicalities and niceties, like, some data on
procedure to ensure delivery of justice were also added/ financial year basis and some on calendar year basis, choice
initiated during this period under examination. Some such of index, omission of data of some categories of vehicles,
major initiatives during the period under consideration, element of time lag in the behaviour of different economic
which were seen to be making significant difference are, drivers involved in the analysis, might slightly alter the
situation reflecting indicators (percentages / times), but in
A. Concept of "Future / Prospective Income" any case, change in indicators is not likely to be to the extent
Earlier the compensation was based on the income of the of altering the inferences arrived at. Steps to develop
victim at the time of accident. Under the new concept of systems to collect the relevant data might facilitate future
'prospective/future income', the expected future increases objective and accurate analysis. This analysis might clear our
in income are also incorporated into the calculations of the vision about the factors which drove the motor third party
compensation, thereby increasing the compensation by a premium rates in India in last two decades.

24 The Insurance Times, November 2021