It’s high time IRDA spread awareness of approved modes of payment: HC
High Court observes that a notification issued in 2002 in this regard is kept in the dark, and many people, including panel lawyers of insurance companies, are not aware of it
When insurance companies were permitted as early as 2002 to receive premium through internet, etransfer and credit or debit cards, why they were not insisting on vehicle owners following any mode of payment and were still receiving cheques for premium, observed the Madurai Bench of the Madras High Court.
Justice K. Murali Shankar observed that the Insurance Regulatory and Development Authority (Manner of Receipt of Premium) Regulations came into force in 2002, approving payment of premium through cash, banking negotiable instruments such as cheques, demand drafts, pay orders, banker’s cheques drawn on any scheduled bank in India, postal money orders, credit or debit cards, bank guarantee or cash deposit, internet, etransfer, direct credits via standing instructions, proposer, policyholder or life insured through bank transfer and any other method of payment approved by the authority.
The court observed that the notification was kept in the dark and many, including panel lawyers of insurance companies, were not aware of it. It was high time for the Insurance Regulatory and Development Authority (IRDA) and the insurance companies to highlight the notification and create awareness among the public and encourage them to adopt any of the new modes of payment. Nowadays, even petty shops in remote areas were displaying QR code, enabling the public to pay through that mode.
The court observed that when insurance policy was issued on receipt of cheque and it was subsequently dishonoured, law enforcement agencies such as police and transport authorities could not prevent those vehicles from plying on the road since the insurance policy already issued was shown to them.
They could not be expected to verify whether the policy was cancelled or not on that date. By issuing the insurance policy without receiving the payment, the insurers were indirectly allowing the vehicles to ply on the road without valid insurance, in case the policy was cancelled subsequently due to dishonour of cheque, etc., the court observed.
It further observed that the insurance company in order to absolve itself of liability had to prove that it had sent the mandatory notice to the owner and the driver of the offending vehicle, informing about the dishonour of cheque and the cancellation of the insurance policy. It was also duty bound to alert the Regional Transport Office concerned, the court observed.
The court made the observations while ordering compensation on appeals on motor accident claims.