Page 7 - Insurance Times Janaury 2021

The bulk of uninsured vehicles are two- compensation. There is no compensa- year, jumped to around $7,000 levels.
wheelers, with the numbers being as tion for damaged vehicles," said an But this still remains among the lowest
high as 66 per cent. "There were 15 official. globally.
states which had uninsured vehicles to
Aside from a relatively low cover,
the extent of more than 60 per cent," India's deposit insurance reimbursements also appear to take
said the report. In most cases, the longer in India. According to the IADI
renewals are not done after the first cover remains lowest Survey, deposit insurers across the
year. The Budget 2020-21 had brought some globe are devoting more resources to
respite to depositors by increasing the
India is one of the largest auto markets improving their performance on
deposit insurance cover to Rs.5 lakh
in the world with over 20 million reimbursing insured deposits, and this
vehicles sold annually. It is also among from Rs. 1 lakh earlier. has resulted in reductions in
the countries with the highest number Yet the latest annual survey by the reimbursement periods. The average
of road accidents and fatalities. "In this International Association of Deposit number of days to begin depositor
grim scenario, it is a double whammy Insurers (IADI) reveals that India ranks reimbursement has been reduced to
when more than half the vehicles in in the bottom 20 among the 110-odd seven in 60 per cent of jurisdictions, up
the country are uninsured," IIB said. countries in terms of insurance cover. from 33 percent in 2013. The
The coverage limits range from below reimbursement periods begin from the
According to IIB, of the over 23.12
crore vehicles on the road in India as $1,000 to $300,000; India's Rs. 5-lakh date of the closure of the bank.
cover works out to about $7,000,
of March 31, 2019, nearly 57 per cent In India, according to the 2019-20
were uninsured; in 2017-18, 54 per according to the IADI Survey (around annual report of Deposit Insurance and
$6,800 as per current exchange rate).
cent of the nearly 21.11 crore vehicles Credit Guarantee Corporation of India
on the road were uninsured. Countries such as Philippines ($9,875), (DICGC), the average number of days
Mexico ($1,35,222), Argentina between de-registration of a bank and
"The uninsured vehicles largely
($25,130) Russian Federation claim settlement (first claims) was
comprise two-wheelers, and this is
($22,615), Turkey ($25,253), Malaysia about 508 days during the fiscal.
quite obvious as nearly 75 per cent of
($61,080) and Brazil ($62,033) rank
the total vehicles in India consist of There are essentially four mandates
way higher than India, according to
two-wheelers. In this class, over 60 per the latest IADI Survey. followed across jurisdictions. Paybox -
cent of the vehicles remain uninsured, the deposit insurer is only responsible
whereas cars are largely insured, with The majority of the 110 deposit for the reimbursement of insured
insurance systems (DIS) across the
the uninsured numbers quite low at deposits; Paybox-plus - insurer has
world are legislated and administered
around 10 per cent," the report said. additional responsibilities, such as
by the public sector, although around certain resolution functions (financial
About 52 per cent vehicles don't renew
one quarter are privately support); loss minimiser - where insurer
their insurance after the first year - administered, says the survey.
mostly two-wheelers fall out of the actively engages in a selection from a
IADI has been monitoring the global range of least-cost resolution
insurance net at the time of the first
renewal of the insurance policy. Covid situation and its impact on strategies; and risk minimser - insurer
deposit insurers. According to it, unlike has comprehensive risk minimisation
According to the Motor Vehicles Act, the financial crisis of 2008, most functions, including a full suite of early
2019, it is mandatory for all vehicles to deposit insurers have not opted to intervention and resolution powers.
be insured with third-party vehicle increase deposit insurance coverage.
insurance policy. Third-party or liability Around 25 per cent of deposit insurers
The survey notes that the average are assigned a 'pay box' mandate,
insurance covers the legal liability
level of coverage was around $70,000 according to IADI, while 40 per cent of
arising due to death or disability of per depositor per institution across the
third party loss or damage to their systems followed a 'play box-plus'
globe. The regions with the highest mandate. India follows a paybox
property.
average coverage levels are Europe mandate, while Argentina and Brazil
"When an uninsured vehicle meets and North America ($110,000). India's follow pay-box plus mandate. Brazil
with an accident, the injured or cover, at an abysmal $1,446 before the and Malaysia have a wider risk
relatives of dead people don't get any increase in the Budget in February this minimiser mandate. T
The Insurance Times, January 2021 7