Chennai: With the ever-increasing motor accidents in India resulting in mounting accident victims and consequent insurance claims, the Insurance Regulatory and Development Authority (IRDA) has embarked on a revolutionary track — setting up an autonomous body to test the safety of vehicle models currently sold here.

IRDA’s () idea is to do comprehensive tests — including the crash test — to determine the safety and sturdiness of a vehicle. The results, when extrapolated with the past claims experience, will help the insurance industry to determine the model-wise premium structure.

Motor insurance rates are likely to be liberalised or detariffed from 2004 onwards and insurers are in a dire need of a scientific basis to arrive at a premium rate. Currently the Tariff Advisory Committee (TAC) fixes the motor insurance rates on an unscientific basis.

Recently IRDA chairman N Rangachary visited Sundaram Clayton’s test-track facility near Chennai. The company had established the track to test its anti-braking system (ABS).

There is no institution in India similar to the National Highway Traffic Safety Administration (NHTSA), USA, which continuously looks at the vehicle safety issues. Further, there is no law in India that deals exclusively with vehicle safety. While vehicle recalls due to manufacturing defects are common in the US, it is not so in India, though the quality of Indian manufacturing is nothing much to boast about.

It is a known fact that vehicles, including the princely-priced cars sold in India lack passenger safety gadgets like airbags and collapsible steering wheel. The only safety mechanism that is being touted by the car manufacturers are the side crash bars, which incidentally are of no use in case of a head-on crash or when the vehicle itself is structurally unsound.

A year ago, a speeding popular Japanese-make car hit an oncoming moped. The moped went up and landed on the car roof that caved in killing two occupants. It was found that the columns used to support the roof were of inferior strength. It is a known fact that European vehicles are sturdier than Japanese models.

No one would have forgotten how an Indian-made Korean mid-sized car used go up in flames on our highways. Ironically, most of the cars exported from India are fitted with air bags and collapsible steering wheel as the standard attachments. It is also not known whether the exported cars are made of different steel thickness than what is sold in India.

Today all non-life insurers, more so the four government insurers, are bleeding to death due to adverse claims ratio under their motor insurance portfolio. Motor insurance claims are of two kinds — damage to vehicle called ‘own damage’ and third party claims (by accident victims). While the loss ratio in respect of own damage is around 60 per cent it is more than 300 per cent in the case of the third party.

With the trend of replacing a damaged part with a brand new one, insurers are forced to pay the cost of new parts that are exorbitantly high. All these years the four government general insurers did not raise the issue with the vehicle manufacturers. Some time back, IRDA had a meeting with all the vehicle manufacturers to discuss this issue, but to no avail.

With the safety of Indian vehicles being suspect IRDA, along with the Centre for Consumer Education, Research, Teaching, Training and Testing (Concert), is planning to set up a vehicle safety testing body. While the organisational and financial structure of the proposed body is yet to be finalised, Rangachary says the testing body will mobilise the funds on its own.

Says Concert trustee R Desikan: “Everything will be determined before March 2003.” The final form of the proposed vehicle safety body will be announced during the two-day National Workshop on Safety of Vehicles to be held in Chennai next month.”

  also see : www.irdaindia.org