Public liability insurance, though complicated, is worth pursuing for India’s economic and industrial development, according to Mr N Rangachary, the first chairman of IRDAI.
He was commenting on Moneylife Foundation’s “Report on Public Liability Insurance in India”, released on 6 March 2023.
The report is a 360-degree perspective on the rules and regulations governing liability insurance, its functioning and operability—both for massive public tragedies like the 1984 Bhopal Gas disaster (which led to the enactment of the Public Liability Insurance Act) and the subsequent evolution of commercial liability products in line with contractual mandates of global commercial organisations.
From an insurance perspective, the report suggests that non-life insurers concentrate on improving their product coverage and claims conditions.
Mr Rangachary, who served as IRDAI chairman from April 2000 to June 2003, said, ”The awareness and spread of liability insurance in India is determined by many factors; some of those are our appreciation of the risk involved in business or any activity and the risk that is sought to be covered. It also depends on the dimension of the risk, whether the risk is amenable to be treated as an insurance product and the capacity of the insurance market to absorb such risks. Further, there is the need for a suitable risk cover which is available to all those who deal with liability.”
Among several issues, the report states the reasons for the low penetration of liability insurance in India and possible solutions for creating awareness about the relief options available for victims.
India is hampered by the fact that the Law of Torts has not been codified. Furthermore, judgements which define judicial thinking in the area of public liability have thus far been concentrated only on industrial accidents. So, victims of non-industrial accidents such as the Morbi bridge collapse or the Uphaar Cinema tragedy have no recourse to relief.
Proposals
The proposals in the report include:
• Mandating public liability insurance by expanding the legislation to encompass all business owners;
• Setting up a separate judicial forum for victims of non-industrial casualties so that their plea for justice and compensation can be fast-tracked. This ought to be on the lines of the motor vehicle accident tribunals which are considered highly effective by all stakeholders.
