With the number of hit-and-run road accidents seeing a sharp rise last year, non-life insurance companies have seen a three-fold rise in claims settled under the Solatium Fund.
The fund saw a total outflow of Rs 95.51 lakh in April-September 2009 as against Rs 37.62 lakh in the corresponding period last year.
The fund is a common pool to which all general insurers contribute and is used to compensate for deaths and serious injuries in hit-and-run accidents.
The fund is used only in cases where the injured or the deceased does not have an insurance cover.
This scheme, meant for for paying compensation to victims of road accidents in ‘hit and run’ cases, was introduced in 1982 by amending the Motor Vehicle Act, 1939.
Under the scheme, Rs 25,000 is paid to the families of those killed in hit-and-run cases and Rs 12,500 to those seriously injured.
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While it is mandatory for insurance companies to contribute 0.1 per cent of the motor gross written premium to the fund, some private insurers set aside 1 per cent of the motor gross written premium.
The fund is being administered by New India Assurance since 2005-06. Prior to this, it was managed by the four public general insurance companies.
New India charges around 2.5 per cent of the claims settled as claims handling fees on a half-yearly basis. The corpus of the fund was around Rs 24.66 crore at the end of March 31, 2009. The total claims settled stood at Rs 2.47 crore in 2008-09 as against Rs 1.61 crore in 2007-08. The victims have to file an application within six months from the date of the accident.
“According to the rules, the non-life insurers pool in money and we manage the fund,” said New India Assurance Chairman and Managing Director M Ramadoss.
“This fund was set up to help victims of hit-and-run cases get relief. We do not know the total outflow from the fund,” said Iffco Tokio General Insurance MD and CEO S Narayan.
Commercial vehicles get the claim from the third party pool, which is still tariffed, while passenger vehicles are detariffed.
Earlier this week, the road transport ministry has expressed an intent to charge up to Rs 15 on every premium paid on the insurance of vehicles insured to fund cashless facility to the accident victims.
There are around 10 million registered vehicles across the country and total premium collected from them was around Rs 6,980 crore for the first six months of the current financial year.