The Securities and Exchange Commission of Pakistan has increased compensation amount from Rs 20,000 to Rs 500,000 for legal heirs in case of accidents resulting in death under the proposed amendments to Motor Vehicles Act, 1939 for motor third party liability insurance scheme.
In this regard, the SECP has issued draft of the proposed amendments to the Motor Vehicles Act, 1939 here on Friday. According to the key features of the revised Motor Vehicles Act, 1939 issued by the SECP, the commission aims to make necessary amendments to the Motor Vehicles Act, 1939, for smooth implementation of the motor third party liability insurance scheme.
As per the provisions of the said law, it is mandatory for all the motor vehicle owners to have the motor third party liability insurance cover, which is meant for compensating the road accident victims or their legal heirs. The compensation limit of Rs 20,000 provided under the existing provisions of the law, in cases of bodily injury and death, needs to be enhanced.
Furthermore, the existing procedure for determination of the liability through courts is too lengthy, costly and cumbersome to be afforded by the claimants. Moreover, due to non-enforcement of the existing laws coupled with unattractive limits of compensation in case of road accidents as provided under the existing legislation, the said compulsory motor third party insurance is either not purchased, or purchased from bogus insurance entities offering third party insurance certificates at cheaper rates along roadsides.
Consequently, the victims of the road accidents or their legal heirs are either not compensated or get a very little compensation for accident. In order to address such issues, the proposed amendments aim at introducing "no fault option" whereby a claim for death or bodily injury shall be payable to the victims of road accidents or their legal heirs without obtaining any court order and regardless of whether or not the insured person was at fault.
The compensation amount of Rs 20,000 for legal heirs, in case of accidents resulting in death, has also been enhanced to Rs 500,000 through a proposed amendment to the law. Furthermore, a schedule has been proposed to be inserted in the law to prescribe the enhanced limits for bodily injuries. To address the issue of bogus policies, the SECP has also proposed to impose heavy penalties.
For the purpose of public consultations, a draft of the proposed amendments has been posted on the SECP website. The feedback or comments received from all concerned on the proposed amendments within 30 days would be taken into account while finalizing the draft. The said draft would also be shared with IAP, non-life insurers and insurance brokers to seek their valued feedback and comments before finalizing the amendments.
Under the No-Fault insurance, the SECP said that the injured person or legal heirs, as the case may be, opting for claim process shall file the claim for third party insurance benefits before the insurer along with supporting documents. A policy of insurance shall provide cover in respect of any one accident, in a public place, up to the following limits:
Firstly, where the third party dies in the accident, a limit of five hundred thousand rupees in all; secondly where the third party suffers permanent disability, as specified in Schedule I, from the accident, the limit as set out in Schedule I thereto in respect of that particular injury, provided however that the total compensation in such an event shall not exceed Rs 500,000. Where multiple injuries are caused by the same accident, the amount of compensation payable under this head shall be aggregated but so as not to exceed in the aggregate a sum of Rs 500,000.
The policy of insurance shall provide cover of accident where temporary disability results from an accident, a limit of one hundred thousand rupees in all. Subject to the limitations set out hereinabove, where multiple deaths and injuries are caused in the accident, a total limit of twenty million rupees in aggregate for all such deaths and injuries shall apply in place of the other limits set forth.
The SECP said where the third party opts for coverage under this section, the claim for death or bodily injury shall be payable irrespective of whether or not the death or bodily injury was caused by or arose out of the insured's fault.
The benefits under a policy covered shall be adjusted on the first day of July of every alternate year, according to the rate of inflation indicated by the Consumer Price Index (CPI) as published by the State Bank of Pakistan or the approved figures of such Index by the government.
Provided that such a policy shall not be required to cover liability in respect of the driver or passenger in a private vehicle; (ii) To pay compensation unless the affected third party or the affected third party's legal representative/heirs, as the case may be, executes/execute and sign/signs a Letter of Indemnity and Compromise Agreement to release the insurer from any liability related to the claim; (iii) To cover liability for death or bodily injury arising out of an accident unless the claim in respect of the accident is filed with the insurer as soon as possible but not later than 90 days of the occurrence of the accident in any event.
The SECP said that the Compromise Agreement means the relevant agreements entered into between the insurer and the third party or the insurer and the affected third party's legal heir, as the case may be, evidencing the final discharge from liability of the insurer, executed in terms of Schedule I.
The 'Private Vehicle' hereunder means a vehicle other than a public vehicle and includes any vehicle used by its owner solely for carriage of goods which are his property or the carriage of which is necessary for the purposes of his business, not being a business of providing transport.
The insurer shall process the claim and make payment within 15 days of the receipt of the claim along with all supporting documents. As per court-led insurance claim process, the SECP said that the injured person or legal heirs, as the case may be, opting for the court led process shall file the claim for third party insurance benefits before the court along with necessary supporting documents.
For the purpose of filing a claim, the court shall be where the incident has occurred or where the legal heirs or injured persons normally reside. The court shall decide the matter expeditiously and day-to-day hearing may be conducted and conclude the proceedings within 120 days. The court may for reasons to be recorded dispense with any provisions of the Code of Civil Procedure, 1908 for expeditious disposal of the matter, the SECP added.