THIRD PARTY INSURANCE
An unproductive formality
By AZAM ALI
July 12 - 18, 2004
The conventional Third Party Insurance (TPI), which is in vogue for many decades, has deprived infinite number of second hand vehicle owners of billions of rupees besides providing extortion opportunities to the traffic police and provincial Excise and Taxation Department officials.
It could have provided benefits to the vehicle owners apart from introducing insurance culture in the country had our legislators and economic managers taken pain to use the system productively.
Third Party Insurance exists in the law for the benefits of people in case of accidents. However, not a single example has come to the light so far that any persons having such a policy was given the benefit in the absence of any guidance or awareness about the scheme. Over five million owners of 10 to 25 years old vehicles all over the country had started buying TPI forms at a cost of Rs 10 to Rs 15 during mid 70s which has now come to Rs. 40 to Rs. 150 in the urban areas while the rates were still 50% lower in the suburbs or the countryside.
Experts said that if TPI system was properly regularized and the established insurance companies were allowed to come into the business, resultantly the second hand vehicle owners would have been getting benefits even if they were charged a little higher to get insured their vehicles. Apart from benefits to the vehicle owners the pedestrians and other elements would have been receiving compensations in case of any eventuality.
The area of third party insurance can be utilized for the benefit of the people including pedestrians, drivers and government and public property could easily be given a safe protection provided a proper insurance system for the old vehicles owners was introduced. This remains an untapped highly potential area for the insurance sector throughout the country.
At present, old vehicles owners have to acquire forms from brokers at the rate of Rs. 40 to Rs. 150 from outside the designated branches of NBP and offices of the Provincial Excise and Taxation Department offices where old vehicle owners have to visit to pay Motor Vehicle Tax or for registration and transfer of the vehicle.
This is a must for them, as traffic police is authorized to penalize or even seize the registration book by issuing a chalan, with the remarks that this is the "Qanoon", but the traffic cop himself does not know the details of the Third Party Insurance (TPI).
Some of the Third Party Insurance companies are associated with some well established Insurance Companies but majority of them just print the insurance papers and cards and sell to the brokers at a very low price at the rate of only Rs. 5 to Rs. 10. These brokers at the above-mentioned rates sell the insurance papers to the vehicle owners. The sellers usually do not fill the particulars of the vehicles or the vehicles owners but they have stamps of different colors and signed with different style and different colors of pens. They are known as Oath Commissioners of vehicles. Some time, Third Party Insurance papers are so attractive that traffic policeman is impressed without knowing the reality of the Insurance Company and seller. One of the old vehicle owners declared it a mockery.
One has to go through the bitter experience when he ever visits the excise and taxation office for transfer or registration of old vehicle. One of the requirements is to produce Third Party Insurance papers, when he arrives on the street where dozens of brokers or sellers of insurance papers are sitting on the roadside, he faces number of them persuading the customers for the sale of the insurance papers. When he enquires about the rate, the agent starts writing names or number of vehicle without declaring the price. When the customer insists to know the exact price, the sellers begin from Rs. 150 but virtually grab the client and agree to sell the Insurance Papers even at a price of Rs 15. He also offers yet another benefit to the buyer of date of expiry and ask, "Sir you fill the remaining particulars yourself".
There are over half a million vehicular population in Karachi alone which are 10 to 30 years old, that include 58,000 auto rickshaws, 20,000 yellow cabs and taxis, 15,000 buses and mini buses, about 70,000 motorcycles, 5,000 scoters and more than 50,000 private cars of various categories. Old trucks, trawlers, water tankers, oil tankers, suzuki pickups and other goods carriers' numbers are disputed. However the total of old vehicles in Karachi city come to half million.
In interior Sindh number of old vehicles come to about 19,000 only. But in Lahore, Islamabad, Rawalpindi, Peshawar, Quetta, Faisalabad, Multan and other cities number of old vehicles are much higher than Karachi.
Economists said that there is a need to introduce an insurance culture among old vehicle owners all over the country. This is the field where all the elements including old vehicle owners, general citizens' insurance companies and even the government can gain benefits. This would also serve the cause of insurance sectors like life insurance which needs a proper and comprehensive awareness through aggressive marketing.