General insurance companies have expressed their inability to implement the directive by the apex court of India on the issue of verification of pollution under control (PUC) certificates of vehicles of any vehicle owner before renewing his policy.
Citing practical difficulties, insurance companies are planning to take up the directive with the Supreme Court. In a bid to curb pollution, the Supreme Court had, on August 10, issued a slew of directions including that insurance companies will not renew insurance of a vehicle unless the owner provides pollution under control certificate.
The SC bench headed by Justice Madan B Lokur also asked the Ministry of Road Transport and Highways to ensure that all fuel refilling centres in the National Capital Region (NCR) have PUC centres. The bench was hearing a PIL filed by environmentalist M C Mehta way back in 1985 dealing with various aspects of pollution.
“As insurers it would be difficult for us to ensure the use of PUC by any customer. We are finding ways to represent our stand to the Supreme Court,” said G Srinivsan, CMD, New India Assurance and chairman of General Insurance Council, the official representative body of all domestic general insurers. “We don’t have the means to enforce it,” he said.
The apex court accepted the recommendations of the Environment Pollution (Prevention and Control) Authority (EPCA) to ensure mandatory linking of pollution under control certificate with the issue of annual vehicle insurance. The court also asked the authorities to issue specifications for the kind of equipment required to be installed at PUC centres so that regulatory violations can be curbed.
Though it was expected that the insurance regulator Insurance Regulatory and Development Authority (IRDA) may issue some instruction to the general insurers for complying with the SC order, the regulator refrained from taking the step and took a stand that the matter is between SC and insurers and there is need for its intervention.
The government is reportedly exploring the possibility of alerting vehicle owners once their PUC documentation expires. A study by Centre for Science and Environment (CSE) has revealed that only 23 per cent of the vehicles in Delhi go for PUC tests.
Though the Supreme Court order was valid only for the Delhi-NCR region, insurance sources said there’s a possibility of it being extended to other regions of the country at a later stage.
“The SC order means more responsibility, paper work and additional manpower for insurance companies. Moreover, policies are now increasingly taken by consumers online,” said an insurance source. It also means a rise in cost for insurers which will add to the premium that vehicle owners pay every year, he said.
General insurance companies are already making huge losses in third party motor insurance business despite the significant annual hike being allowed by the regulator IRDA. Third party insurance is mandatory for all vehicles plying on the roads under the Motor Vehicles Act.
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