Indian Railways - Accidents and No Insurance Cover
Content
Indian Railways incur high losses due to accidents
and no insurance cover
Shilpy Sinha & Viraj Desai, ET Bureau Jul 15, 2011, 01.25am IST
Tags:
United India Insurance|
Railway Claims Tribunal|
Puri Express|
G Srinivasan
MUMBAI/NEW DELHI: The Indian Railways, which carries 30 million passengers a day, has exposed
itself to high losses during accidents since it has stopped buying insurance cover that is mandated by law
in most modes of transport — from a moped to an aircraft.
The two train accidents this week —Kalka Mail in Uttar Pradesh and Guwahati-Puri Express in Assam —
resulted in 70 deaths and left 300 injured, which will cost the Railways about Rs 10 crore. This will be paid
out of its budget since it does not have an insurance cover.
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"The Railway Claims Tribunal administers compensation paid out in incidents of death and injury," said
Anil Saxena, additional director general (public relations) for Indian Railways.
"We pay an extra sum as ex-gratia amount over and above the compensation through our internal
mechanism."
He did not comment on the absence of insurance cover. The Indian Railways stopped buying insurance in
fiscal 2009 after realising it would have to shell out Rs 78 crore, compared to Rs 77 crore in the previous
year. Ever since, it has been compensating for deaths and injuries out of its pocket.
Ironically, these payouts have been higher than the amount it would have paid for insurance since rickety
infrastructure and terror attacks have led to loss of many lives and caused damage to property. By not
taking cover, the railways had been saving on the insurance premium of about Rs 40 crore a year for the
past two years.
But at the same time, it has been paying over Rs 150 crore as compensation for death, injury and loss of
booked goods. The railways discontinued the policy cover not just to cut costs, but also because the
claims process of insurance companies were causing inordinate delays. Absence of insurance at
railways, the biggest transporter of passengers, is in contrast to stringent laws in the country for
automobiles.
Section 146 of the Motor Vehicles Act, 1988, provides for imprisonment of three months, or a fine of Rs
1000, or both, for a person driving an uninsured vehicle — be it a moped or a powerful motorcycle Even
aviation companies, burdened by losses, are forced to take insurance cover since their clientele is the
cream of the society with high incomes. If an airline does not buy cover, its flights are grounded.
"Railways should take a cover," said G Srinivasan, chairman & managing director, United India Insurance.
"They are exposed to huge risk and the risk is increasing everyday. They should insure the property as
well."
One of the reasons for insurance companies quoting successively higher rates for railway cover is the
frequency of accidents. The investment required to maintain and upgrade the British- era infrastructure is
lacking. "Reinsurance companies have been unwilling to underwrite the cover because of the frequency
of accidents," said another insurance company executive.
The compensation has been rising steadily in tandem with accidents. Minister of State for Railways E
Ahamed informed the Rajya Sabha that there were 100 train accidents in 2009-10, including collision,
derailments and fires. The Railways paid Rs 140 crore that year as compensation.
In case of death, the compensation is Rs 5 lakh, and in case of disability it can go up to Rs 1 lakh
depending on the severity of injuries. Those suffering minor injuries are paid Rs 25,000. In comparison,
motor vehicle liability is unlimited while aircraft liability is capped at Rs 5 lakh.
and no insurance cover
Shilpy Sinha & Viraj Desai, ET Bureau Jul 15, 2011, 01.25am IST
Tags:
United India Insurance|
Railway Claims Tribunal|
Puri Express|
G Srinivasan
MUMBAI/NEW DELHI: The Indian Railways, which carries 30 million passengers a day, has exposed
itself to high losses during accidents since it has stopped buying insurance cover that is mandated by law
in most modes of transport — from a moped to an aircraft.
The two train accidents this week —Kalka Mail in Uttar Pradesh and Guwahati-Puri Express in Assam —
resulted in 70 deaths and left 300 injured, which will cost the Railways about Rs 10 crore. This will be paid
out of its budget since it does not have an insurance cover.
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Know Miss India's SecretsVanya shares her Gulabari Tips With You. Share
Yours With The World!www.facebook.com/gulabari
Bus Tickets OnlineGet best bus booking @travelyaari. Fast & secure
booking. No fees.www.travelyaari.com
"The Railway Claims Tribunal administers compensation paid out in incidents of death and injury," said
Anil Saxena, additional director general (public relations) for Indian Railways.
"We pay an extra sum as ex-gratia amount over and above the compensation through our internal
mechanism."
He did not comment on the absence of insurance cover. The Indian Railways stopped buying insurance in
fiscal 2009 after realising it would have to shell out Rs 78 crore, compared to Rs 77 crore in the previous
year. Ever since, it has been compensating for deaths and injuries out of its pocket.
Ironically, these payouts have been higher than the amount it would have paid for insurance since rickety
infrastructure and terror attacks have led to loss of many lives and caused damage to property. By not
taking cover, the railways had been saving on the insurance premium of about Rs 40 crore a year for the
past two years.
But at the same time, it has been paying over Rs 150 crore as compensation for death, injury and loss of
booked goods. The railways discontinued the policy cover not just to cut costs, but also because the
claims process of insurance companies were causing inordinate delays. Absence of insurance at
railways, the biggest transporter of passengers, is in contrast to stringent laws in the country for
automobiles.
Section 146 of the Motor Vehicles Act, 1988, provides for imprisonment of three months, or a fine of Rs
1000, or both, for a person driving an uninsured vehicle — be it a moped or a powerful motorcycle Even
aviation companies, burdened by losses, are forced to take insurance cover since their clientele is the
cream of the society with high incomes. If an airline does not buy cover, its flights are grounded.
"Railways should take a cover," said G Srinivasan, chairman & managing director, United India Insurance.
"They are exposed to huge risk and the risk is increasing everyday. They should insure the property as
well."
One of the reasons for insurance companies quoting successively higher rates for railway cover is the
frequency of accidents. The investment required to maintain and upgrade the British- era infrastructure is
lacking. "Reinsurance companies have been unwilling to underwrite the cover because of the frequency
of accidents," said another insurance company executive.
The compensation has been rising steadily in tandem with accidents. Minister of State for Railways E
Ahamed informed the Rajya Sabha that there were 100 train accidents in 2009-10, including collision,
derailments and fires. The Railways paid Rs 140 crore that year as compensation.
In case of death, the compensation is Rs 5 lakh, and in case of disability it can go up to Rs 1 lakh
depending on the severity of injuries. Those suffering minor injuries are paid Rs 25,000. In comparison,
motor vehicle liability is unlimited while aircraft liability is capped at Rs 5 lakh.
