Orphan claims now provided for, new accounting norms on anvil

Venkatachari Jagannathan
01 November 1999

If you thought that India's general insurance companies settle road accident claims only if the victim or vehicle involved is insured, then change your views! What's strange is that these underwriters are made to pay irrespective of whether the vehicle involved in the accident is insured or not!

As the Motor Vehicles Act states that all vehicles should have at least a third party insurance policy, courts award compensation on the premise that the concerned vehicle is deemed to have been insured by any one of the four public sector general insurers!

All that an accident victim has to do is send a legal notice to any of the insurance offices located near the accident site. The onus shifts to the insurance company to prove that the hit and run vehicle is not insured by it.

Given the size of India's vehicle population and the poor investment in information technology by the underwriters, they find it almost impossible to establish that a vehicle involved with an accident is not insured with any one of its offices in the country! Naturally, courts decide the cases in favour of claimants.

Such claims, where the details of the vehicle, insurance details, etc., are not available are called 'orphan claims'.

Better provision
Till last year, motor third party claims lacking insurance particulars were recognised and provided for only on identification and confirmation of insurance coverage by the companies.