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“For instance third-party insurance premium amount will soar to Rs 13,000 a year from existing Rs 4,500 for passenger vehicles having more than 35 seats,” said Dip Prakash Pandey, an insurer and the leader of the team formed by the Insurance Board (IB) to work out the rate.
The team is yet to get the rate endorsed by transporters and Department of Labor and Transport Management. The new rates and compensation amount is scheduled to come into effect from August 17.
Nepal Transportation Entrepreneurs´ Federation (NTEF) has said that the new rate is too high.
It has pushed the government to reduce the compensation amount to Rs 250,000 to bring the premium down.
Insurers, on the other hand, said the new rate as the least amount they could agree at. “Fixation of compensation amount at Rs 500,000 has raised our liability by 10-fold, compared to now. On top of that, commercial vehicles are among the most vulnerable in terms of accidents,” said a member of the team.
Presently, maximum liability borne by the companies stands at Rs 75,000 in case the accident victim passed away and Rs 50,000 in case s/he suffered permanent disability. Maximum treatment cost covered by the companies too stands at Rs 50,000.
Under the new rate, Pandey said the companies would pay Rs 500,000 to the families in case the victim succumbed to injuries or suffered a permanent disability. They will also pay a treatment cost of up to Rs 200,000.
The rise in premium amount will be equally applicable to all commercial vehicles, including passenger vehicles of different capacities, tankers and trucks and also taxis.
Passenger vehicles are presently paying in a range of Rs 3,000 to Rs 4,500 per annum for getting third party insurance coverage. Truck and tanker operators pay Rs 3,000 to Rs 4,000 and taxis pay Rs 1,500 to Rs 3,000 for it.
The government had announced the sharp rise in third party compensation amount after it identified dispute over low compensation in roads accidents as one of the major causes behind increasing incidents of closure and obstruction of highways in recent months.
The amount is applicable for public as well as private vehicles. To ensure enforcement of the new provision, the government has made it mandatory for vehicle owners to produce the evidence of third party insurance for new registration and renewal of vehicles.
However, the team has not studied how the new provision will impact insurance premium for private vehicles. “The premium amount for them will be lower as compared to commercial vehicles though,” said Pandey.
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