Page 9 - Insurance Times March 2021

not collect the insurance premium All general insurers registered in the characteristics of drones that
amount in its own account and then country will have to make changes in differentiate them from other aircraft,
transfer the same to the insurance their IT systems to mandatorily collect and taking into account the
company," it added. and account for this premium as a phenomenal growth in the usage of
separate and additional fifth section. drones for multiple purposes, there is
According to the report, the motor
The working group on linking traffic a need to augment the current
insurance business sourced by MISPs
violations to insurance premium has insurance availability, customised to
through brokers and insurers put
recommended inserting a fifth section the requirement of drone owners and
together constitutes around 25 per
to motor insurance called "traffic operators,", said the regulator.
cent of the total motor insurance
violation premium" in addition to
business or around 11.25 per cent of The model product of the regulator will
motor own damage insurance, basic
the overall general insurance business. provide coverage for legal liability to
third-party insurance, additional third
In its report, the committee said that third parties, physical damage to drone
party insurance and compulsory
given the potential opportunity for bodies, medical expenses incurred by
personal accident premium. This
motor insurance business through the section will float over both Own operators, and personal accident cover
MISPs, there is a need to develop and to operators. In legal liability to third
Damage (OD) and Third Party (TP)
strengthen regulatory framework and parties, insurance firms will - subject to
sections of motor insurance and can be
supervision activities for this the sum assured - pay all fees and
attached to any section of motor
distribution channel. expenses incurred during the
insurance, it said.
The panel has also made recommen- investigation, defense, or settlement
This will ensure, regardless of any
dations on the original equipment of any claim. Costs incurred by the
insurance cover a motor owner wants
manufacturers (OEMs). It noted that insured for representation at any civil
to buy, the person will be subjected to inquest or inquiry, too, will be borne by
OEMs wield tremendous influence over traffic violation premium, unless he
the automotive dealers. them.
already has in force a motor insurance
In drone hull cover, insurers will be
policy wherein traffic violation
IRDAI committee proposes liable to indemnify the policyholder for
premium has already been paid.
insurance premiums any cost incurred on account of repair
(or replacement) of drones arising out
based on traffic violations IRDAI urges general of accident or theft. Similarly, in
Motor Vehicle owners may soon have insurers to file products personal accident cover of operators,
to pay insurance premium depending for drone coverage insurers will have to pay the sum
on the traffic violations involving the assured in case the operator suffers a
IRDAI has asked general insurance
vehicle. While a committee set up by bodily injury resulting in death. In
the IRDAI has proposed that a "traffic companies to file the "model product" addition, it will also have to pay 5 per
suggested by one of its working
violation premium" should be added to cent of the sum assured or Rs 5,000 -
groups, regarding drones, given that
the vehicle insurance policy, the High- whichever is lower - to transport the
Powered committee for Traffic only a handful of insurers offer mortal remains of the insured.
coverage to drones under aviation
Management in the National Capital If the bodily injury results in permanent
insurance at present.
Territory (NCT) of Delhi has disability, the insurer will have to pay
recommended this proposal to be run Alternatively, they could can design 125 per cent of the sum assured.
on a pilot basis in the NCT. and develop their own product and file
it with the insurance regulator at the Under the medical expense cover, the
While the pilot has been discussed only insurance company has to reimburse
earliest to meet the demands of this
for NCT, it may be run in any state reasonable and customary medical
growing sector.
with the consent of that State expenses, incurred up to the maximum
Governments and State Police However, any product developed by sum insured, if the operator gets
department if the state has adequate insurers has to offer third-party liability hospitalised. Further, the insurer will
system of capturing and transmitting insurance, the regulator added. have to pay for the ambulance cost,
traffic violation data of vehicles, it said. "Considering the unique which is capped at Rs 1,000. T

The Insurance Times, March 2021 9