CEO’s Take on Supreme Court Ruling on Third-Party Insurance

Published By: Zee Business ​

Published Date: NA

The Supreme Court issued a major ruling on third-party insurance for vehicles, mandating a three-year insurance policy for all new four-wheelers at the time of registration and five years for two-wheelers. This order comes into effect in September this year and prioritises road safety concerns.

Insurance companies have welcomed this decision, with Rakesh Jain, CEO of Reliance General Insurance, stating that it will benefit everyone in the industry. The CEO highlighted that this ruling addresses a significant gap in India's vehicle insurance landscape, where approximately 50% of vehicles are legally required to have insurance but don't actually carry it.

The executive pointed out a common pattern where vehicle owners purchase insurance for the first year but fail to renew it in subsequent years, leaving them without coverage. This creates a problematic situation where insurance disappears suddenly, leaving many policies ineffective.

From a consumer perspective, the CEO notes that while purchasing a vehicle involves a significant decision, adding mandatory insurance provides excellent protection for both the industry and customers. The benefits include coverage, compliance with regulations and affordability. The CEO believes this approach will help design pricing that works for both customers and insurance companies.

He also expressed that this ruling would lead to a pricing adjustment that insurance companies would follow. For road safety, every four-wheeler now requires a three-year third-party insurance policy at registration, while two-wheelers need a five-year policy.

The Supreme Court clarified that road safety is a serious concern, with thousands of people becoming victims of accidents daily. Despite arguments regarding implementation challenges, the Court rejected attempts to weaken or delay the policy.