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In light of the PIL seeking refund/adjustment in the motor vehicle premiums paid by the insurance, the Madras High Court has issued a notice to the Insurance Regulatory Development Authority of India pursuant to the nation-wide lockdown imposed to control the pandemic.
The petition was filed by Advocate G.Rajkumar, stating that appropriate policy measures should be given to provide relief to the insurance policyholders, who were unable to use their vehicles during the lockdown. It was contended that notifications were issued by Union Ministry of Home Affairs which resulted in an unprecedented and drastic restriction on traffic across the country which in turn has profited the Insurance companies since there were very few accidents and thus fewer claims.
"The premiums collected ought to have been adjusted/ refunded to the policyholders across the country as was done globally," the Petitioner said. He also states that regulation is available in the motor vehicle tariff to adjust premiums, but the regulator has not provided any regulation or guidelines in relation to motor vehicle insurance refunds.
The other grounds of contention raised by the petitioner are a) preferential treatment to Air Travel passengers b) global practices and advisory of other such regulators like motor Insurance companies in UK and US have already refunded 10-15% of annual premiums c) precedents set by other companies towards fair and transparent functioning of interests of policyholders.
The Division Bench of Justice Krishnan Ramasamy and Justice R. Subbiah heard the petition and notices were issued by the IRDAI and Ministry of Road Transport and Highways, returnable in 2 weeks.
Insurance claims in the country have dropped by 70% and insurance companies have made windfall gains on motor books. Stock prices of these companies have seen a 40-50 % surge. They enjoy regulatory benefits like it is mandatory to buy third party insurance with motor vehicles. The insurance sector is tough to entry providing benefits to the existing players. It seems like the right thing for them to provide refunds or equivalents credit schemes to help their consumers during this economic downfall.
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