The Securities and Exchange Commission of Pakistan (SECP) is proposing to amend the Motor Vehicles Act 1939 (MVA) to facilitate mandatory motor third party liability (MTPL) insurance.
Among the new provisions, the proposed amendments aim to raise the compensation amount in case of deaths due to road accidents to PKR500,000 ($4,034) from PKR20,000 currently. The proposed law also contains a list of payments in case of injuries that lead to permanent disability, according to local media reports.
A SECP official, explaining the proposed amendment, says that existing laws are not being implemented by provincial transport authorities. Additionally, the current level of compensation offered in the event of road accidents is not attractive for average motorists.
Thus, MTPL insurance is either not purchased, or is purchased from bogus insurance entities offering fake third party insurance certificates at cheaper rates on roadsides. Consequently, victims in motor accidents or their legal heirs are either not compensated or get a very little compensation.
To address the issue of bogus policies, the SECP has also proposed to impose heavy penalties.
Furthermore, the official added, “To address the many issues with the old law, the proposed amendment aims to introduce a no-fault option, where a claim for death or bodily injury will be payable to the victims of road accidents or their legal heirs without obtaining a court order and regardless of whether the accident is determined to be the fault of the insured individual.”
Existing procedures for the determination of the liability through courts is too lengthy, costly and cumbersome to be afforded by the claimants.
The draft of the proposed amendment has been posted on the SECP’s website and comments can be made till 29 September. They will be shared with the Insurance Association of Pakistan, non-life insurers and insurance brokers before the proposed legislative amendment is finalised.