Lucknow: The Allahabad high court’s Lucknow bench has asked the Insurance Regulatory and Development Authority of India (IRDAI) to revisit its 2024 rules that allow insurers to settle claims for completely damaged vehicles without mandatory cancellation of their registration certificates (RCs).The court was hearing a PIL filed by advocate Dhruv Kumar, a former insurance company officer, who has challenged provisions of IRDAI’s master circular dated Jun 11, 2024. IRDAI sought three weeks to file its response. The court also asked the regulator to reconsider the provisions and is expected to take up the plea for an interim stay at the next hearing.The dispute relates to vehicles declared a “total loss” after being damaged beyond reasonable repair. Kumar said IRDAI had issued a circular on Jul 25, 2019, asking insurers to ensure cancellation of the RC while settling such claims.The 2019 circular followed information from law enforcement agencies that documents of total-loss vehicles were being misused to give stolen vehicles a new identity by changing or forging engine and chassis numbers.However, under the 2024 rules, an insurer can pay a reduced claim amount and allow the owner to keep the badly damaged vehicle, without making cancellation of its RC compulsory before settling the claim.“The earlier rule was meant to prevent documents of destroyed vehicles from being misused for stolen vehicles,” Kumar said. He argued that allowing claims to be settled without compulsory RC cancellation could reopen the possibility of such fraud.The PIL seeks quashing of the disputed provisions of the 2024 circular and enforcement of the safeguards prescribed in 2019.
