Court Puts Order Mandating Bumper-To-Bumper Motor Vehicle Insurance On Hold

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The Madras High Court has kept in abeyance, its order mandating “bumper-to-bumper” insurance for five years for motor vehicles, following a submission from the General Insurance Company (GIC) that the direction could not be implemented without the approval of the Insurance Regulatory and Development Authority of India (IRDAI) and that it would require 90 days to do so.

Justice S Vaidyanathan, who passed the order on August 4, kept it in abeyance on Wednesday.

Last month, the Madras High Court ruled that “bumper-to-bumper” insurance should be mandatory whenever a new vehicle is sold, from September 1. This must be in addition to covering the driver, passengers and owner of the vehicle, for a period of five years, the court had held.

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When the matter was taken up yesterday, the GIC counsel told Justice Vaidyanathan that the IRDAI is the regulatory body and its main role is to coordinate with both private and public sector insurance companies in respect of common issues arising in the field of insurance business. Therefore, it is mandatory that both GIC and IRDAI are impleaded as party respondents to this appeal and heard.

He said that consequent to passing of the order, the Joint Transport Commissioner had issued a circular on August 31 to all the Regional Transport departments of the state to ensure effective implementation of the court order.

On behalf of the GIC, the counsel filed a memo dated August 31 stating that though insurance companies are prepared to comply with the orders issued by the court, they merely act as distributors of the products that are approved by IRDAI and without obtaining product approvals, actuarial pricing of products, from it, they cannot launch any new product or add-on cover.

Hence, the insurance companies may be granted 90 days’ time to effect changes in the computer system after due approval from IRDAI. Till then, the order passed by the court may be kept in abeyance, he requested.

“In view of the above representation made by GIC counsel this court is of the view that both the GIC and IRDAI are necessary parties to this case, in addition to arraying the Additional Chief Secretary, Transport Department and the Joint Transport Commissioner (R) as party-respondents, as the circular dated August 31 had already been issued by the Joint Transport Commissioner,” the judge said.

Accordingly, the court on its own impleaded the GIC, represented by its general secretary in Mumbai, the IRDAI, by its chairman in Hyderabad, the Additional Chief Secretary and Joint Transport Commissioner (R) in Chennai as party-respondents in the case. He issued notice to all of them, returnable by September 13.

“In the meanwhile, the order passed by this court on August 4 is kept in abeyance for the present. After hearing the impleaded respondents, a clarification may be issued in this matter, if required,” the judge added.

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