The Hindu : Karnataka / Bangalore News : KSRTC goes to insurance firms for third party cover

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Monday, Sep 08, 2008
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Karnataka

Karnataka - Bangalore

KSRTC goes to insurance firms for third party cover

Anil Kumar Sastry

Move aimed at reducing the financial burden

KSRTC paid nearly Rs. 25 crore as compensation during 2007-08
It will take five years to bring all buses under the new system

BANGALORE: Alarmed over the increasing quantum of compensation being paid to road accident victims through its insurance funds, the Karnataka State Road Transport Corporation (KSRTC) has switched over to public sector insurance companies to settle the claims.

While the Corporation paid nearly Rs. 25 crore as compensation during 2007-08, it paid over Rs. 20 crore during 2006-07.

Hitherto, KSRTC did not get its buses insured with insurance companies by virtue of a provision in the Road Transport Corporations Act. The corporation used to maintain its own insurance fund, verify insurance claims through its personnel, contest claim cases before motor vehicle accident claim tribunals through a panel of advocates and used to do many more things related to settlement of insurance claims.

Four firms

“All new buses being registered after April this year are being covered by four insurance companies with respect to the third party insurance,” a senior KSRTC official told The Hindu.

It will take at least five years to bring all 7,000 KSRTC buses under the new system. Still, the premium amount (Rs. 12.6 crore a year for all buses) will be much less than the compensation being paid by the corporation these days, he noted.

The move to get third party insurance cover for its buses is also aimed at reducing the burden of investigation into thousands of claims for compensation.

According to the norms fixed by the Insurance Regulatory and Development Authority, KSRTC will pay a premium of Rs. 18,000 a year for getting each bus covered under the third party risk, and the KSRTC will cover damages to its buses as it may not be that burdensome, he said.

Financial burden

“Tribunals and courts have been liberal in awarding compensation these days, though the number of accidents as well as the number of victims has come down. Thus, the financial burden on the corporation has been increasing and it was time to change the system,” said the official.

Another advantage will be in the form of pre-claim investigation.

Under the present system, security and vigilance wing personnel of the corporation had to investigate each claim, verify the authenticity of the claims and do many more things.

All these things, the official said, will now have to be done by the insurance companies.

Fraudulent claims

KSRTC is also worried about the increasing number of fraudulent claims that is costing corporation lakhs of rupees.

Thorough investigation by the security and vigilance department had exposed several well-knit rackets involving doctors, advocates, police officials and fraudulent claimants over the last few years. With insurance companies taking over the responsibility, the corporation’s burden will come down considerably, the official added.

The Airavata (Volvo) coaches, however, were being insured under comprehensive cover since their introduction.

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