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Corporate - 3 weeks ago

Car insurance to be mandatory again

Zarif Mahmud: The type of car insurance is changing. Not first party or third party as before, new insurance policies are coming for cars with new names. All registered vehicle owners must have this insurance compulsorily.
The draft Road Transport Amendment Act, 2024 provides for making insurance compulsory for all vehicles. The draft law was approved by the Cabinet on March 13. It said that if the vehicle is not insured, the owner will have to pay a fine of up to three thousand rupees for each vehicle.
Bangladesh Road Transport Authority (BRTA) said insurance will be made mandatory for all types of vehicles after the law is passed by parliament. When asked, BRTA chairman Noor Mohammad Majumder told that the draft law has been approved by making insurance compulsory. If the law is passed, action will be taken accordingly.
Till 2020 there were two types of car insurance in the country – first party or third-party insurance and third party or third-party insurance. First party insurance car must be brand new. In this case, the insurance company provides benefits subject to the conditions of the vehicle. In that case the car owner has to pay a certain amount of money to the insurance company every year. And in the case of third party insurance, this insurance policy is made to provide financial benefits to the accident victims.
This is ineffective in most cases. Third party insurance was mandatory as per Section 109 of Motor Vehicles Ordinance-1983. But in the Road Transport Act 2018, the third-party insurance obligation has been waived.
At the same time, insuring the vehicle is left to the owner’s discretion. Basically, since then the owners have almost stopped insuring the transport. Most of the vehicles that are currently in operation are not insured.
Hasnat Naeem, a private employee, is among the many car owners whose insurance has been stopped. In 2017, he took third party insurance for his motorcycle for Tk 250. The term of this insurance was one year. Then in 2018, when the insurance obligation was lifted, Hasnat did not inquire about the insurance. In this regard, Hasnat said, he took insurance to avoid the traffic police case.
There are 43 lakh 43 thousand 883 registered motorcycle users in the country like Hasnat. Among them there are 11 lakh 14 thousand 801 people in Dhaka alone. And the total number of registered vehicles is 59 lakh 82 thousand 765. According to BRTA sources, 90% of the vehicles registered in the country now have no insurance. The remaining 10 percent have commercial vehicle or new vehicle insurance. They are first party insurance. Before the 2018 law when insurance was mandatory, 90 percent of these car insurances were third party insurance.
As will new insurance
As insurance is made mandatory in the Road Transport Amendment Act, 2024, the insurance sector started working on new insurance policies for vehicles. They say, according to the new law, the type of insurance is changing. There will be nothing called first or third-party insurance. Rather, a new ‘product’ will be introduced, which will not have a high level of indemnity like first party insurance, nor will it be ineffective like third party insurance.
Bangladesh Insurance Association (BIA) president Sheikh Kabir Hossain said that the Prime Minister has asked to cancel third party insurance. Bangladesh Insurance Development Authority (IDRA) will work on what new products can be introduced for this. Whatever they come up with, that will be it.
Sheikh Kabir also said that BIA will work with IDRA on new car insurance. He said, “Since there will be no third party, there will be a system so that if a car is hit by a car, if a person dies, if the car is damaged, there will be compensation.” Not as much compensation as the first party, and not like the third party.
In this regard, IDRA Chairman Zainal Bari told, “Earlier third party insurance was mandatory. This time third party insurance is not mandatory. This insurance has to be done for own vehicle damage. If someone gets into an accident while driving he will get compensation. This is the profit of the car owner. The third party was someone else’s profit. It is no more.
First party or comprehensive insurance is also now optional. Own car insurance will be mandatory. If you don’t get this insurance, there is a penalty. When asked how the premium can be, the IDRA chairman said, from now on, the insurance will have to be done according to the price of the car. Will give premium according to the value of the car. There is nothing new or old here.
Dhaka University Banking and Insurance Department Professor Dr. Md. Main Uddin told that insurance is always good. But the problem that remains is its implementation. It is effective with a big break in between. Now we have to see that there should be no shelter of corruption or injustice here.

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