Third party motor insurance is made mandatory by law in various countries around the world.
Various risks emanating from road accidents include death, bodily injury and property damage.
Amount of death compensation prescribed under “Act Only” policy of Tk 20,000/- (Taka twenty thousand only) is considered grossly inadequate in the context of the current socio-economic condition of the country.
In other parts of the world the amount of death compensation is revised upward from time to time taking into consideration several factors namely; socio-economic condition, standard of living, inflation etc.
It appears that the amount of death compensation allowed in “Act Only” policy has its source originated in Insurance Act 1938. Much water has flown into the Ganges since then. But this amount still remains unchanged even after the elapse of nearly 83 years!
Our world has changed considerably over the years. But sadly, we do not seem to have changed our way of thinking.
Statistics will show that the majority of the people falling victims to road accidents belong to the ordinary and poor segment of the society.
A poultry sum of Taka 20,000 in today’s market where the cost of living has gone up considerably compared to the past is not only a joke, but it goes to show our attitude that we hardly care about the lives of the poor forgetting conveniently that every life is precious.
In 1938,when the Insurance Act came into being this amount may have been adequate but today it is unthinkable if not absurd.
Taking into consideration various factors discussed above, it is recommended that the present level of death compensation is raised to the level of a minimum of Tk 2,50,000 (Taka two hundred and fifty thousand).
It is, however, relevant to mention here that while increasing the amount of death compensation, third party motor premium is also increased simultaneously which makes sense.
It is hoped that the relevant authority will look into this matter seriously and take steps to correct the situation.
The authorities may want to follow the practices of other insurance markets in this regard including our neighbour India and other SAARC countries.
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).