A news from a reliable sources suggests that Insurance development regulatory authority (IDRA) has formed a committee comprising representatives from Bangladesh Insurance Association, Bangladesh Insurance Academy, high officials from insurance companies and IDRA to look into the matter.
It is relevant to mention here that on 20-12-20 “Act only” policy introduced by Road Traffic Act 2018 covering death only to third parties was declared null and void by IDRA leaving a total vacuum. As a result, it is reported that many vehicles are currently using the road without insurance coverage.
It presents a dangerous situation as far as road accidents are concerned involving third parties. It was totally an irresponsible act on the part of IDRA which defied all logic and reasoning.
It is believed that this decision was influenced largely by insurance companies who want motor comprehensive insurance to be made compulsory in their own interest
It is important to mention here that in other countries around the world, third party motor insurance is made compulsory by law. This insurance covers interalia death, bodily injury and damage to third party property unlike “Act only” policy which offers only death cover, a limited and restricted cover indeed.
There are various important aspects to be taken into account before taking a final decision in this regard.
Firstly the cost of comprehensive motor insurance may be too high to be affordable by the majority of motor insurance buyers.
Secondly there will be a huge number of motor vehicles plying on the road which are too old and unfit for road use.
In other markets motor vehicles usually more than 10 years old are not eligible for comprehensive insurance.
According to market practice overseas, a significant number of vehicles operating in our market may not be eligible even for third party insurance let alone comprehensive insurance coverage.
In the bigger interests of the majority of motor insurance customers, IDRA should resist pressures from insurance companies and take their decision in accordance with international market practice and revive third party motor insurance compulsory as per Motor Ordinance 1983.
IDRA should not go against the wishes of motor insurance buyers and international market practice just to satisfy the unreasonable demand of motor insurers which does not make sense.
It is hoped that IDRA will examine pros and cons of the matter and take a prudent decision which is consistent and coherent with other insurance markets elsewhere.
Mr. Haque was brought up and educated in Dhaka. He obtained his master’s degree with honours in Biochemistry from University of Dhaka (DU). He spent nearly four decades in Dubai (UAE) working for several multinational insurance companies in various capacities. He obtained his Fellowship (FCII) from The Chartered Insurance Institute (CII), London, Associateship (AIRM) from The Institute of Risk Management (IRM), London, Associateship (ACIArb) from The Chartered Institute of Arbitrators (CIArb), London. He has authored several books on insurance which have been acclaimed both at home and abroad. He contributes regularly on insurance matters in various online insurance news portals and is a founder General Secretary of Bangladesh Insurance Professionals Society (BIPS).