On the spot motor insurance creates irregularities

On the spot motor insurance has paved the way for a new paradigm in Sri Lanka’s motor insurance but some insurance experts expressed concern on payment procedures and the lack of legal protection for customers when settling claims as there is no complaint made to the police by the customers with regard to accidents.

However, insurance companies have failed to tackle problems of clients such as the valuation of the damage and fraudulent claims which will arise in the event of immediate settlement of claims and the under estimation of the damage when the claims are paid on the spot.

DIG City Traffic A.J.M Lafir told The Sunday Times FT that according to the Motor Traffic Ordinance motorists should lodge complaints on accidents at the nearest police stations and a proper legal procedure including the issuing of police reports could be followed after that.

It will also help the Police to maintain accurate data on the number of accidents and to identify black spots.
However he noted that under the ‘VIP On The Spot’ system motorists were in the habit of settling minor accidents without complaining to the police.

In such cases there is no legal protection or the involvement of the police to safeguard the interests of such motorists, he said.
Lafir disclosed that around 378 road accidents are being reported in the city of Colombo per month at an average of 15 to 12 accidents per day but this does not reflect the correct data due to amicable settlement of minor accidents under the ‘VIP On The Spot’ system.

Brand manager of Ceylinco VIP On The Spot Indika Abeyratne told The Sunday Times FT that they have expertise and qualified motor mechanical engineers to assess the damage caused to a vehicle in a road traffic accident to settle claims on the spot.
On the other hand the Ceylinco Insurance Company will consider the payment of any additional claims for the damage caused to a vehicle in a road traffic accident if the customer provides a bill for the total cost for repairs from a garage after thorough inspection by their officers.

He added that the company will investigate into fraudulent charges and such claims would not be settled on the spot. He disclosed that the motor car insurance premium of his company is around Rs 6 billion per annum and the claim ratio is around 60 percent.

A senior official of Sri Lanka Insurance said that it is difficult make a proper assessment on damages caused to a vehicle on the spot and an immediate assessment amount may be lower than the real cost of damage. On the other hand there is a lack of expertise to carry out a full accurate assessment of damages within a short period and therefore on the spot payment will some times mislead the client, he said.

Ceylinco’s VIP ‘On the Spot’ insurance is the market leader with an ever widening gap against other insurers since the introduction of the on the spot claim settlement. It is the only insurance policy that offers motorists a ‘Benz’ for a ‘Benz’ as replacement when customer repairs exceed four days, Abeyratne said.

The motor insurance industry faces the common problem of getting police reports quickly in the event of an accident.

This results in a delay in processing the claim by insurance companies. Janashakthi Insurance Co Ltd is looking into this matter under its “Janaratha” full option scheme.

A senior manager of the company said that they would use latest technology such as digital cameras and IT to assess the damage on the spot. He said that giving cash on the spot is not approved due to the risks attached to the policy holder and to avoid irregularities.

Sri Lanka Insurance company‘s “Formula Plus” and motor insurance schemes of the Eagle insurance and Union Assurance also offer easy settlement of claims without resorting to on the spot payments.