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Non Life Insurance - Rules for Third Party Motor Claims

13 Jun 2007

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Last year, film stars like Salman Khan and Puru Raj Kumar drove their vehicles over sleeping pavement dwellers under the influence of liquor. Innocent Lives faced the wrath The criminals continued to walk unaffected in broad daylight. Reason- Existing ineffective laws.

The India's National Insurance Academy has made certain suggestions. It has introduced four preventive measures and three retrospective tools to tackle the problems regarding fraudulent third-party motor claims.

The Motor Insurance of India has been very adversely affected on account of bogus third-party motor claims in collaboration with corrupt surveyors and insurance company employees. Private insurers have resolved the problem in a way by refusing to accept motor insurance claims from customers with poor road-safety records, in contrast to the four government-owned general insurers which on an average paid out third-party motor claims running to between 200% and 300% of premiums collected.

The National Insurance Academy (NIA) has devised a "scientific method" that would facilitate insurers and tackle these third party motor claims. The NIA method is based on seven processes, four preventive and three retrospective tools.

Preventive tools brought about are:

  • Stress analysis that would detect the strain and tension in a claimant's voice to figure out if he/she is truthful about the accident.
  • Red flagging' which essentially means reporting bogus claims, thereby creating some sort of a bank. The next time a surveyor deals with a particular accident case, he can dip into the bank to help him identify a pattern.
  • Predictive modelling is a third tool by which an insurer can lay his hands on information on the type of vehicles making a claim in a certain area.
  • The fourth preventive process is Database Searching. A record of various places and conditions surrounding that area will be kept. This would help an insurer to be extra cautious while settling claims in that area."

    • Retrospective tools that to be implied are;

  • 'Exception report' which would point out any exception in the number of claims in various branches of the insurance company.
  • 'Online analytic processing', to maintain a person's records to keep track of the claims he has made.
  • 'Link analysis', where a link would be searched for similar types of accident in different parts of the country.

    • However, these methods are still awaiting adoption as motor third party continues to be the subject of heated discussion after detariffing.

    Apart from the need to deal with fraudulent motor claims, the Insurance Regulatory and Development Authority (IRDA) has also found it necessary to train the scanner on drivers who are habitual offenders, with a view to hiking the insurance premiums steeply on the vehicles they drive.

    Nitin Dossa, the Chief Executive Chairman of Western India Automobile Association states that the high premiums that levied due to repeated offences would prove a warning to habitual offenders. A major reason why people respect traffic rules abroad is that they are fined as per the the number of offences committed.

    Source: www.ecrmagic.com BACK

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