ISLAMABAD: The proposed amendment to the Motor Vehicles Act 1939 (MVA) has enhanced the compensation amount in case of deaths due to road accidents to Rs500,000 from Rs20,000. The Securities and Exchange Commission of Pakistan (SECP) is upgrading it to be implemented in third party liability insurance schemes.

“The problem is that existing laws are not being implemented by the provincial transport authorities. Additionally, the current level of compensation offered in the event of road accidents is not attractive for average motorists — which is why they have stopped purchasing the mandatory third party insurance,” said an official of the SECP.

Though it is mandatory under the existing MVA for all motor vehicle owners to have third party liability insurance cover, which is meant for compensating road accident victims or their legal heirs, the practice has stopped.

“To address the many issues with the old laws, the proposed amendment aims to introduce a no-fault option, where a claim for death or bodily injury will be payable to the victims of road accidents or their legal heirs without obtaining a court order and regardless of whether the accident is determined to be the fault of the insured individual,” the official added.

At the same time the compensation amount of Rs20,000 for legal heirs in case of accidents resulting in death has also been enhanced to Rs500,000. The proposed law also contains a list of payments in case of injuries that lead to permanent disabilities.

The draft of the proposed amendment has been posted on the SECP’s website and comments can be made till Sept 29, after which it will be shared with the Insurance Association of Pakistan, non-life insurers and insurance brokers before finalising the amendment.

Published in Dawn, August 11th, 2018