Page 13 - Insurance Times September 2020

The Draft UAS 2020 had suggested With the growth in the use of drones, The working group felt the product
compensation in respect of Third-Party some insurers in the country are offer- should first cater to prevention of
Liability to be on the lines of Motor ing drones cover through existing prod- losses from temporary or permanent
Vehicles Amendment Act 2019. The ucts and extending some covers as and closure of small business. Hence, it
Irdai committee said it is partially ac- when required. One insurer has should provide some sort of compen-
ceptable in situations like Section 164 of launched third-party liability cover of sation.
Amendment Act of 2019 (payment of Rs 10 lakh through one of the tech
According to the recommendations,
compensation in case of death or griev- firms on "Pay as you Fly" basis where the pool should address approximately
ous hurt). However, as per the commit- a drone operator can choose a flying 40-50 million MSME workers and for
tee, the unlimited liability (Section 166) option - up to four hours, one day and that to happen, a pool capacity of Rs.
and Solatium Fund appearing under MV one Month. Some insurers are provid- 75,000 crore should be built, where
Act is a cause of concern to develop a ing third-party liability in a range of Rs approximately Rs. 2,000 crore could
feasible drone insurance ecosystem in 10 lakh to Rs 20 lakh cover along with come from industry participants and
view of non-availability of claim data for optional hull cover. the rest from the government as a
drone losses and lack of re-insurance The report which looked into the insur- backstop.
support for unlimited liability.
ance requirements of the RPA owners The backstop triggers only in the event
The Irdai Working Group has left the and operators, suggested coverages of pandemic striking and the total loss
decision of arriving at the third-party along with draft/specimen wording, payouts being higher than the capac-
liability limits to individual insurers as factors which affect the pricing (pre- ity garnered by the local insurance/re-
the underwriting appetite, retention, mium) and finally the underwriting insurance and international market.
reinsurance programme devised and considerations.
finally the business volume generated Globally, drones are classified as an "This relief could lead to protection of
for the drone segment may differ. 'aircraft' and the aviation regulators employment of such workers and,
However, the drone owner/ operator have stepped in to regulate the sector. hence, not only support in providing
should choose an appropriate third- running expenses of such households
but also prevent reverse labour migra-
party liability limit when flying the Pandemic pool should tion. Such migration not only prevents
drones in a high value concentration
zone, after a thorough assessment of have govt and pvt sector spread of pandemic but also creates
less strain on government resources in
potential scenarios which can lead to participation: IRDAI panel mid to long term period", it added.
liability claims.
The committee formed by the Insur- The country's largest reinsurer, Gen-
The company should pay the sum as- ance Regulatory and Development eral Insurance Corporation (GIC Re),
sured in the event of bodily injury re- Authority of India (Irdai) to examine which has managed the terrorism pool
sulting in death of the insured benefi- the requirement and rationale for set- and the nuclear pool will be an appro-
ciary within 12 months of such bodily ting up a pandemic pool has recom- priate administrator of the pandemic
injury being sustained. The company mended the formation of an Indian pool, according to the working group.
will also, in addition to the sun assured, Pandemic Risk Pool, with public-pri-
pay up to two per cent of the sum as- vate-government participation. According to the recommendations,
the product should focus on protecting
sured or Rs 5,000 (whichever is lower) It has reasoned that this should be
towards the cost of transporting the done as the quantum of loss because the salaries of MSME employees' for
mortal remains of the insured/ of the pandemic is huge and is beyond up to three months. In terms of com-
authorised operator from the place of the capacity of public or private com- pensation, the group recommended a
death to the hospital/ residence and/ panies or government alone. cover of Rs. 6,500 (30-40 per cent) of
or cremation and/or burial ground. average minimum wage for a maxi-
While Covid-19 has caused devastation mum of 10 employees per MSME for a
In the event of bodily injury resulting across all sectors and sections of soci- maximum of three months.
in permanent total disability of the in- ety, the committee, based on feed-
sured/ authorized operator within 12 back, felt low income groups and mi- Since voluntary covers hardly find tak-
months of such Injury being sustained, cro, small and medium enterprises ers, the group has proposed a manda-
tory pool product for MSMES, along
the company will pay 125 per cent of (MSMES) should be the main beneficia- with property insurance cover. "Cur-
the sum assured. ries of the pool. rently, the insurance sector has ap-

The Insurance Times, September 2020 11