Unlike health and life insurance, fewer people actively seek travel insurance. According to the latest annual report of the Insurance Regulatory and Development Authority of India (Irdai), only 1.4 million domestic travel insurance policies were issued in India in the financial year (FY) 2014-15. Many neglect to buy travel insurance. Those who do buy it, do so to cover themselves for issues like loss of baggage and delays. The importance of having travel insurance, however, comes to the fore when we hear of accidents like the recent one caused due to derailment of the Indore-Patna Express train.
Insurance for rail travel
Every train accident highlights the need for higher safety standards. These disasters also shed light on the poor level of insurance penetration in the country. The Indian Railway Catering and Tourism Corporation (IRCTC) had launched an optional travel insurance scheme on 1 September this year, which is offered in partnership with ICICI Lombard General Insurance Co. Ltd, Royal Sundaram General Insurance Co. Ltd and Shriram General Insurance Co. Ltd.
Currently, about 35% of passengers booking train tickets through IRCTC’s website are opting for this insurance. Of about 550,000 tickets booked each day, which translates to about 1 million passengers, only about 350,000 passengers buy this optional travel insurance.
Dipankar Acharya, country head-affinity and strategic relationships, Royal Sundaram General Insurance, said that over the past 3 months, it has averaged out to around 30%. “So on an average, one in three passengers is opting for this insurance,” he added.
However, the penetration varies hugely with trains and routes. For instance, the Indore- Patna Express that derailed on 20 November, causing loss of over 140 lives and over 200 injuries, had only 78 insured passengers at the place of the accident. According to a spokesperson of the IRCTC, 695 passengers on board the train had reserved tickets. Moreover, of the over 140 passengers who lost their lives, only five had coverage under this optional travel insurance. Of those with significant injuries, only seven had this cover and among those who sustained minor injuries, only eight were covered.
The scope of travel insurance
This optional travel insurance is a group insurance policy given on an individual basis. A premium of 92 paise per passenger is charged while booking the ticket, if you opt for it. This amount remains the same irrespective of the category of travel or the distance of the journey. Once opted for, all passengers under one PNR (passenger name record) are covered.
For the purposes of this scheme, accidents and victims are defined according to sections 123, 124 and 124-A of the Railways Act, 1989. An accident could be a collision between trains, of which at least one is a passenger train; or the derailment of a train; or other accident to a train or any part of a train carrying passengers.
The insurance provides a cover of Rs10 lakh in case of death or permanent total disability. For permanent partial disability, the cover is up to Rs7.5 lakh. For hospitalisation expenses, the cover is up to Rs2 lakh and Rs10,000 for transportation of the mortal remains of a victim. Coverage of hospitalisation expenses is in addition to the coverage for disability and death.
The claims have to be filed within 4 months from the date of accident, along with a report on the accident from the railway authorities, and a list of deceased passengers in case of a death claim. This insurance can be claimed over and above any compensation that the government may give to victims of train accidents. According to the Railway Accidents and Untoward Incidents (Compensation) Amendment Rules, 1997, the government gives a compensation of Rs4 lakh in case of death and up to Rs4 lakh for injuries and permanent disabilities.
Relaxation of claims process
Specifically for claims arising from the Indore-Patna Express train accident, life insurers have come forward to ease the claims process. Insurance companies have relaxed the norms for claims. Normally, the nominee of the insured person has to present a death certificate from the competent authority, for the insurance company to decide on a claim. Depending upon the insured amount and duration of the policy, insurers also investigate the possibility of non-disclosure, among other things.
Apart from the three companies providing the optional rail travel insurance, at least two life insurers have also simplified their processes for settling the claims of the train accident victims. Ravi Kutumbarao, head-operations, Bajaj Allianz Life Insurance Co. Ltd, said the insurer is trying to figure out from their database if any of their customers were involved in the recent train accident near Kanpur. “So far, nobody has registered any claims with us. It is very early...Usually, people file the claims about 60-70 days after the incident,” he said. “Sometimes, we...set up an investigation. We have relaxed this process...if a name appears in the list of deceased in the accident, that alone will suffice to file a claim,” he said.
Max Life Insurance Co. Ltd has announced that it will accept any evidence from the government, designated district officials of the state government, or hospital authorities showing death in the Indore-Patna Express accident.
ICICI Lombard, which offers travel insurance on railway tickets, has so far received information on five cases of death and injury. “We are in direct touch with the families....We have technically approved the claim for the cases of death, where confirmation has been received from the authorities concerned. We have waived off other documents such as postmortem report,” said Sanjay Datta, chief, underwriting and claims, ICICI Lombard.
Acharya said that there are lessons to be learnt. “Of the 142 death cases (reported as on 25 November), only a few were covered under the insurance...the next thing that we have to ensure is that everybody buys this cover,” he said, adding that once the claims from this unfortunate accident are settled, people will be able to see the prudence in buying this cover.