Presently, 90 per cent of the vehicles do not possess genuine third-party insurance certificates, which make it obligatory for the insurance companies to pay compensation to people who get injured or die in road accidents apart from the owners of the vehicles they insure.

Though the exact number of such compensation claims is not known due to the unavailability of research and any data collection, it is well-known that scores of thousands of people get injured or die in road accidents every year without getting a single penny in insurance compensation.

Now the Securities and Exchange Commission of Pakistan (SECP) and the Insurance Association of Pakistan (IAP) have agreed upon a formula, under which, they would take steps, in collaboration with the provincial governments, to bring vehicles under the net of legal insurance companies.

But before discussing the legal complications at provincial level and well-entrenched corrupt practices, some figures of the National Road Safety Secretariat (NRSS) of the Ministry of Communications may make this picture a bit vivid.

According to the NRSS, people spend over Rs100 billion a year in accident-related medical expenses. Every year, on an average 1.26 causalities take place per kilometre on the highways. The country has a large road network of 259,758 km of which 8,318 km are the national highways and 2,027 km motorways. The total number of accidents on all the roads could be larger, keeping in view the massive under-reporting.

The NRSS is currently collecting data from hospitals in 112 districts and the trend reflects that fatalities plus serious injuries are 2.70 per 1000 population. If this rate is applied to the current population, projected fatalities plus serious injuries are about 0.418 million per year which shows that police is reporting less than 2.5 per cent of all motor vehicle fatalities and serious injuries.

The National Injury Survey report estimates that the incidence of road accident was 15 per 1000 person per year. Using these figures, the estimated motor vehicle injuries in 2006 were about two million which showed that police were reporting less than one per cent of all accidents. Regional comparison with other Asian countries revealed that reported fatalities are 4.5 times less than in other countries. There has been a tremendous growth in the automobile sector in the past six years. Vehicle production, including cars, trucks, motorcycles, tractors, buses and other commercial vehicles has sky rocketed from 195,791 units in 2001-02 to 998,592 units in 2005-06 (an increase by 410 per cent). Passenger cars and light commercial vehicles have seen substantial 300 per cent increase. But despite this growth, the country is in the pre-motorisation stage where eight in 1000 people have cars.

The head of the Insurance Department of SECP (Karachi), Dr Mumtaz Hashmi told Dawn that knowing the exact number of illegal insurance certificates would need a separate research that may take years, but it was a recognised fact that victims of road accidents seldom get any compensation The tiresome process of getting any compensation through courts often exhausts the victims from pursuing their cases.

He said regulating the whole sector needed a national resolve and time to do things in steps. Without the help of provincial governments, no quantum leap could be taken towards a regulated third-party vehicle insurance sector.

Now the excise and taxation departments will be asked to ensure that third-party insurance certificates submitted at the time of payment of motor vehicle tax are issued by the registered insurance/takaful companies. The interior ministry has agreed to ensure strict compliance.

He said the IAP has also agreed to issue third-party insurance certificates which provide for admission of liability on a “no fault basis”. Compensation made under this policy document will be as per the schedule of benefits of Workmen Compensation Act 1923 (prevalent capital benefits are Rs200,000 per life), subject to an overall aggregate limit of any one accident of Rs10 million and compensation shall be payable to the third-party without going to courts. The SECP has floated a number of proposals to the provincial governments to make the campaign a success.

The commission is now providing a list of registered insurance companies authorised to issue the certificates under the Insurance Ordinance 2000, to provincial governments for dissemination to district offices of excise and taxation departments engaged in motor vehicles’ registration. The list is also being provided to those branches of the National Bank of Pakistan (NBP), assigned to collect road taxes to ensure that before issuing motor vehicle registration or tax receipt, it is ensured that applicants have valid “Act Liability” cover from an authorised insurer.

The commission has asked the provincial governments to delete Section 67 of the Motor Vehicle Ordinance 1965. Making the section ineffective will make it compulsory for the owners of passenger-carrying vehicles to seek cover on a “no fault basis” from an authorised insurer/takaful company so as to ensure that the victims of road accidents are promptly compensated.

The Excise and Taxation department will only accept certificates issued by certified entities. The IAP has also drawn up a scale of charges, which would be followed by insurance/takaful companies.

To ensure that motor vehicle certificate issued by authorised insurers/takaful operators are accepted by the concerned excise and taxation offices, it was agreed that a close liaison be maintained by SECP and IAP with the relevant senior officials of the provinces. For this purpose, the SECP has had senior level meetings with the governments of Sindh and Punjab.

In order to ensure that the third-party insurance certificates cannot be forged easily, the IAP will issue third-party certificates on security paper with built- in security features. To minimise harassment from police officials, the IAP will design and introduce insurance tokens to be displayed by the insured vehicles on their windscreens.

The IAP also agreed to set up a website for maintaining database for valid motor third-party insurance covers issued by their member companies. This website will assist the excise and taxation and other law enforcing agencies to determine genuineness of the insurance certificate being presented to them.

The commission has also asked the provincial governments to make it compulsory by law to require all motor vehicle users to stick on their wind screen a tax paid and insurance cover token. This will enable law enforcement agencies to easily identify all motor vehicles which may not be in compliance of the law.