The Securities and Exchange Commission of Pakistan (SECP) has apprehended that the data on road accidents reported by the Pakistan Bureau of Statistics is underreported.
A Commissioner of the SECP explained the status of Motor Third-party (MTP) Insurance in Pakistan.
Apparently, data on road accidents reported by the Pakistan Bureau of Statistics is underreported as evidenced by a comparison between data published by PBS and World Health Organization in 2016. Data published by World Health Organization in 2016 showed that there were 27,582 deaths in the country in road accidents whereas PBS reported road accident fatalities as 4,448 in that year.
For the same year, the global burden of disease (GBD) reported fatalities number to be 52,708 in Pakistan. International studies show that number of fatalities in road accidents in Pakistan is way higher than reported by PBS.
As per the data available on World Health Expectancy Website, in 2020, 28,170 people died in road accidents which makes 1.93 percent of total deaths in the year. This illustrates the death rate of 15.18 per 100,000 of the population.
The SECP will create a digital database to provide a hassle-free digital online claim settlement process for auto insurance in Pakistan.
The SECP Commissioner stated that we must prioritize the creation of a digital database, which will serve as the foundation for a robust auto-insurance repository, and leverage it to broad-basing MTPI and provide a hassle-free digital online claim settlement process.
Lastly, the current status of motor-third party insurance in Pakistan demands immediate attention. A massive awareness drive by all stakeholders including SECP, the Insurance Association of Pakistan, the National Highway and Motorway Police, provincial traffic police, excise and taxation departments, motor registration authorities and the insurance industry is the only way forward for ensuring a safer and insured Pakistan.
As per State Bank, in fiscal year 2021, 362,863 consumers and 45,843 bank employees secured bank loans for purchasing cars. This indicates that a total number of 408,706 motor vehicles were financed by bank loans which get mandatory insurance. In other words, in the year 2021, among the 830,203 vehicles insured in the whole country, 408,706 motor vehicles were insured because of bank finances. This is almost half of the total insured cars.
As per the statistics published by the Federal Bureau of Statistics-Government of Pakistan relating to road traffic accidents in 2021, a total of 10,379 reported road accidents occurred all over Pakistan, out of which 4,567 were fatal resulting in 5,609 casualties and injured 12,059 people.
It is evident from the data above that every year thousands of road accidents lead to a large number of causalities and an even larger number of injured people. In the aftermath of road accidents, the damage is done to not only vehicles but also to human life and human health.
The objective of motor third-party Insurance is to provide some relief to victims. In other words, for instance, in 2021, 12,059 people were injured and 5,608 people lost their lives to road accidents: collectively, 17,667 victims were affected by road accidents, which means that 17,667 families were affected by road accidents.
Hence, it is essential that every motor vehicle must have motor third-party insurance so that these affectees could be compensated in their hard times.
The above data shows that there is a need for a comprehensive framework for the implementation of existing MTP insurance in Pakistan. However, currently, due to the absence of effective enforcement of MTP insurance in the country, no compensation is paid to these people through insurance.
Moreover, the potential market for insurance also remains untapped. It is also causing potential loss to the national exchequer due to non-collection of taxes and other levies which should be applied if the insurance coverage is issued through a legal source, SECP officials added.
