The Insurance Regulatory and Development Authority has created a Motor Third Party Declined Risk Insurance Pool. It provides mandatory third party cover for commercial vehicles.
The existing motor third party pool will be dismantled with effect from March 31, 2012. The motor third-party pool was created in 2007. IRDA said the existing motor third party pool is eroding interest of the policyholders besides causing financial stress to the general insurance companies.
The newly-created declined pool would be applicable to all commercial vehicles for standalone third party insurance which is mandatory as per Motor Act.
No proposal for insurance cover from commercial vehicle owners should be rejected by any general insurer. The General Insurance Corporation would act as the pool administrator.
Dismantling of existing Indian Motor Third Party Pool
The existing Indian Motor Third Party Pool shall be dismantled in the following manner:
i. The dismantling of the motor third party pool shall be done on clean-cut basis.
ii. The pool shall not be subject to run-off.
iii. The general insurers who have issued the policy shall also be responsible for servicing them and settling the claims as and when they arise.
iv. The total liabilities of the motor third party insurance policies shall be calculated as ordered by the Authority separately.
v. These liabilities shall also be signed off by all the general insurers.
vi. Based on the actuarial calculations each general insurer shall submit the details of the calculations to the pool administrator who shall verify the same.
vii. The pool administrator after verifying shall allocate the amounts to be transferred by one insurer to other insurers the net balances after due process of reconciliation.
viii. Following such an agreement, it shall be the responsibility of the insurer to service and settle the claims under the motor third party insurance policy to the satisfaction of the claimant.
ix. The process of clean cut transfer shall be overseen by the following committee:
a. Member (Non-Life) – Chairman
b. Head of Department (Non-Life) – Member Convenor
c. Head of Department (Actuarial) – Member
d. Appointed Actuary of the Indian Motor Third Party Insurance Pool – Member
e. Pool Administrator – Member
f. Secretary General, General Insurance Council -Member
g. Auditor Appointed by the Authority – Member
x. The pool administrator shall get the Third Party Pool Accounts of the members of the Indian Motor Third Party Insurance Pool audited by a chartered accountant firm approved by the Authority expeditiously, not later than 30-6-2012.