Strengthening Third-Party Car Insurance: Govt's Plan

Jawad

08 Aug 2023

301

Strengthening Third-Party Car Insurance: Govt's Plan

The government is in the process of reevaluating and enhancing the motor third-party insurance policy, aiming to provide optimal safeguarding and convenience for policyholders. The latest updates of Govt Initiative to Enhance Motor Third-Party Insurance Policy is shared online for the comfort of the viewers and customers.

Securities & Exchange Commission of Pakistan's (SECP) Insights

Officials from the Securities & Exchange Commission of Pakistan (SECP) recently engaged with a select group of journalists, sharing insights about the forthcoming revisions to the motor third-party insurance (MTPI) policy. The MTPI policy primarily extends coverage to victims of road accidents or their legal beneficiaries in the unfortunate event of bodily injuries or fatalities resulting from road mishaps.

Objective and Significance of MTPI

The MTPI framework serves a multifaceted purpose, offering protection to accident victims, fostering responsible driving practices, alleviating the financial burden on the government, ensuring adherence to legal requirements, and contributing to the growth of the market. Globally, MTPI plays a pivotal role in meeting Sustainable Development Goals (SDGs) by addressing crucial aspects of road safety and financial security.

The Legislative Framework

In Pakistan, the MTPI domain falls under the purview of the Federal Statute, particularly the Motor Vehicles Act (MVA) of 1939. Within this framework, Section 94 of the Saved Chapter VIII mandates the necessity of valid insurance for motor vehicles used in public spaces. The West Pakistan Motor Vehicles Ordinance 1965 further reinforces this requirement, allowing registration authorities to suspend a vehicle's registration if insurance is absent.

Evolution and Proposed Changes

Over time, legislative enhancements have been introduced to bolster MTPI compliance. The National Highways Safety Ordinance (NHSO) of 2000 necessitates no-fault compensation insurance for vehicles on national highways. The forthcoming Draft Road Safety Act 2022, proposed by the National Transport Centre and Ministry of Communications, seeks to streamline MTPI governance by replacing previous acts. It will empower registration authorities to withhold registration unless third-party insurance is confirmed.

Challenges and Remedies

Challenges within the existing framework include limited compensation thresholds for fatalities, absence of distinct compensation limits for injuries, lack of enforcement during registration and on-road verification, and the absence of a no-fault settlement option. The SECP has responded with a proactive approach, suggesting penalties for counterfeit policies, raising awareness, waiving FED for insurance premiums, and streamlining claims processes.

Fostering Implementation

To ensure effective implementation, the SECP emphasizes the need for mandatory insurance verification during vehicle registration and proposes amendments to the Motor Vehicles Act of 1939. Additionally, aligning with the National Highways Safety Ordinance of 2000 is essential. The SECP underscores the importance of addressing these obstacles and promoting collaboration among stakeholders to achieve comprehensive and efficient MTPI regulations.

Motor Insurance Third Party Coverage Government Initiative Insurance Enhancement Policy Vision

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