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`Cap third party liability before tariff hike' -- Transporters on collision course with IRDA

Sarbajeet K. Sen
P. Manoj

NEW DELHI, May 1

BRACE yourself for a fresh round of disruption of movement of goods by road in the coming days.

With the Insurance Regulatory and Development Authority (IRDA) firm on announcing the revised motor insurance tariffs within May 15 and the transport operators unwilling to accept any hike prior to enactment of legislative amendments to cap third party liability (TPL), a major confrontation is on the cards.

Transport operators under the aegis of the All India Motor Transport Congress (AIMTC), the apex body of transport vehicle owners, have recently sent a communication to the IRDA asking it to defer the announcement and also reminding the insurance regulator of a similar agitation by truckers on the same grounds in 1998.

The representatives of AIMTC have also met the Minister of State for Road Transport and Highways (MoRT&H), Gen B.C. Khanduri, and appraised him of their stand on insurance tariff hikes.

"We will be left with no option but to take to the streets if the IRDA goes ahead and announces any hike in motor premium," Mr J.M. Saxena, Secretary-General, AIMTC, told Business Line after his meeting with Gen Khanduri on Monday.

He said that the AIMTC had asked the Minister to expedite the process of amending the Motor Vehicles Act for limiting the TPL according to the Structured Compensation Formula suggested by a committee that had gone into the matter a couple of years ago. The committee had suggested that TPL for motor vehicles should be limited to Rs 7.5 lakh for permanent total disability and Rs 5 lakh for death. However, MoTR&H officials said that the process of amending the Act, which has been lying in cold storage for a long time was unlikely to be carried out in a haste, throwing open the likelihood of truckers going on a collision course with the IRDA.

In its communication to IRDA, AIMTC has said that it will "oppose any hike in insurance third party premium till the committee's recommendation regarding limiting the liability in third party claims is implemented. This is the only way to save the insurance companies and the transport industry," it has said. Transporters argue that the unlimited liability of motor vehicles result in the bleeding of the insurance companies on this count.

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