The interest of victims of road accidents has been jeopardised following the proposal to cap the unlimited third-party liability coverage under the Motor Vehicles Act.
This is based on the recommendations of the Justice Rangarajan committee, calling for the need to review third-party liability for accident cases in light of the move towards detariffication.
The 22-member strong committee was set up last year by the central government to look into the detariffing of the insurance business, starting with the motor insurance portfolio. This accounts for about 35 per cent of the total general insurance business.
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By capping liability (as is done now in the case of air and rail travel or the Public Liability Act 1991), road accident victims will end up paying the price of inefficiency of state-owned insurance companies.
The insurance industry professes that the loss claim ratio in the motor business is largely on account of third party liability claims, since there is no cap on courts allotting damages to road accident victims.
In the late 1980s,