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| Wednesday, 30 June 2004 |
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Letters | |
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Motor insurance and the average condition The application of the pro-rata condition of average under motor insurance, by some local insurers, would seem to have become a moot point. For the benefit of the reader, what follows, it is hoped, will be of interest. The term Average, according to Webster - New International Dictionary, is a mean or medial sum or quantity. In relation to insurance, the term occurs in two different contexts. In Marine Insurance, for example, Average (or Genral Average) is a contribution that the law requires to be made by parties interested in a marine adventure. It is intended to contribute towards losses suffered by parties, whose cargo happens to be jettisoned for the purpose of saving the vessel, its crew and/ or cargo from a peril of the sea. It is, however, not mandatory that there should be insurance covering such a contribution in respect of any consignment; and where there is no insurance, one has to be personally responsible for the same. Under property insurance policies, the 'Pro rata condition of average', which is invariably applicable and specially mentioned, in the policy document, is one common to all policies identified as Valued policies (as distinct from Agreed Value policies). It states that, should the insured value of the asset be collectively of grater value than the sum insured, then the insured shall be considered to be his own insurer for the difference and shall bear a ratable proportion of the loss. A valued policy for that purpose is one under which the insured property is given a definite value at the time of insuring, unlike in an unvalued policy, such as a motor policy, where the value is determined after a total loss, the insurers paying the insured value, or the market value, whichever is less. Thus, nowhere else in the world is the average condition found in an motor policy; and it should be a violation of accepted principles in insurance to include one, far from applying one in practice. The mythical argument of some local insurers that they would stand to lose when insured undervalue their vehicles for insurance, cannot therefore, hold water. In the event of a partial loss, where some insurers seem to arbitrarily apply the condition of average, as a penalty for undervaluing vehicles for insurance, an insurer's liability is only to indemnify the insured within economic limits of the insured value. Under an Agreed Value policy, the insurer agrees by special arrangement to pay the insured value, regardless of other considerations. The agreed value policy is mostly intended to cover works of art, antiques and the like under All Risk insurance. When discussing the subject, various imaginary concept seem to be advanced regarding the irregular application of the condition of average under motor insurance. In a futile attempt to justify the insurers' arbitrary practice, one has even suggested that the condition of average is implied in the contract! Nothing could be more ludicrous; if it is contrary to accepted insurance principles, it cannot be expressed or even implied. In short, the market value of a motor vehicle has to be accepted as a potential value, it being subjective. The insurers themselves would not accept a potential value in settling a total loss claim, even if it has been declared by the insured. Placing a value on a vehicle, for insurance purposes, is left entirely to the insured. If he under-values the vehicle, he is obviously prepared to be his own insurer for any difference between the market value and the insured value, in the event of a total loss of the vehicle. In the case of a partial loss, however, the policy indemnifies hip up to the insured value, on which the insurers would have charged the appropriate premium. Any views to the contrary? AF - There has been a great effort recently both by the news media and the relevant government departments to focus the attention of the nation on environmental pollution and dengue control. This is a highly commendable step to educate the general public and such awareness programs are a necessity, if we are to effectively control and eradicate mosquito borne diseases. But equally important is the contribution of the public health departments in the central and local government services in enforcing the regulatory procedures to keep public areas clean and pollution free. For instance, the stretch of highway between Kohuwala junction and Werahera is an example where heaps of filth and refuse continue to be piled up with impunity. Both the local council and the public health authority appear to keep a blind eye to this nauseating eyesore. It is a similar experience when one passes through the Dehiwala junction along Galle Road and also the Dematagoda area where open air markets operate. Should not our Ministry of the Environment and Health make a concerted effort to have our cities and countryside areas cleansed free of filth and enforce the law to prevent dumping of refuse on public areas? We have many lessons to learn from Singapore, Malaysia and the Cayman island on how to keep our environment clean and how to succeed in this regard by educating the public and enforcing necessary regulations to impose severe penalties on violators of public health regulations. It is only after ensuring that our own doorstep and neighbourhood are kept pollution free that we are qualified and ready to contribute our knowledge towards the control of global pollution. Dr. H. Weerasekera - In almost all daily newspapers we read about a few people asking for help for various health problems which cannot be cured without spending large sums of money. Those suffering from various ailments needing bypass operations, kidney transplants, lucamia, cancer and many other diseases. Many of us reading these appeals are moved to the quick very sympathetically and many have given assistance whatever they could afford, "why was I born as man to see the sufferings of the wretched which I cannot relieved", said Oliver Gold Smith somewhere. Yes, that is all true but these are daily occurrences in our country and even the most sympathetic person has a limit in helping another in a difficult situation like this. The President's Fund has come to their help but that fund cannot always afford such large sums in regular intervals in the way of Lakhs and Lakhs to help these poor people who just can't afford a few Rupees a day to keep their home fires burning, only the rich and affluent can go through this ordeals. The ordinary man has no way of always getting assistance and the suffers for long periods and perhaps passes away. Our country which boast of one of the best healthy nations in South East Asia, I can hardly believe this because for a simple operation one has to wait sometimes in the queue for nearly 5 or 6 months till your turn comes and a date is given in that manner. Only those who can go through a few lakhs of Rupees go to a private hospital which are now found in many places in the island and get it done within week or so. Yes then the bill comes to Lakhs and Lakhs which is nothing for these millionaires. What is the solution that the Health Authorities of our country can do to help those thousands and thousands who are anxiously waiting for their turn to come in a given month. Yes by that time some of these patients suffer alone and sometimes end in death before your turn comes. D.T. Goonasekera - A time to extend our congratulations for the picture on the front page of Daily News of June 21 with Murali and particularly the spoken caption. We feel sure it will do for more than all the politicians to promote reconciliation in the ethnic conflict (non-existent in truth). We all thank you very much and Murali of course. H. GUNASEKARA - On June 22 at SLBC morning news reading, it was announced that the Korean Government is prepared to make a gift of a certain bacteria chemical to Sri Lanka Government to enable us to eradicate the present day highly spreading Dengue epidemic. It was mentioned in the same news broadcasting that there is a delay in getting this Korean gift since our own Malaria control campaign and mosquito coil producing multi-national companies are against this gift and are vehemently objecting to it. This has been substantiated by the Editorial of a national daily dated 23.06.2004. We like to know the stand taken by the authorities on this very important issue. D. E. ABEYWEERA - As a retired chief clerk with considerable experience, I wish to make my observations on the implementation of the scheme where the contributions are 10 per cent by the employee and 15 per cent by the employer totalling 25 per cent of the Gross salary every month. On an average, the contributions work out to around Rs. 2,000 monthly per individual, or Rs. 24,000 per year. Unfortunately, the Medical Fund is not being utilised for the purpose intended, and instead, the contributions are drawn every month to meet the day-to-day expenses by producing bogus Medical Bills in most of the instances. Sensing what was going on, some years ago, a planter who is today a Senior Executive of a big firm in Colombo, once remarked "Why do you want to go to unqualified and quacks for treatment? I will give you a letter to a leading Doctor in Kandy, go to him". He knew the bills were bogus, yet he was helpless to prevent this. To get a 'Medical Bill' one has to pay 10 per cent commission to the medical practitioner. Since the very purpose of the Medical Fund Scheme was not being realised, there have been suggestions as alternatives. One was to pay the joint contributions to the staff members' monthly through the salaries book or through a voucher. The other one was to deposit the joint contributions to the staffs' individual savings accounts which would earn an interest. Though both suggestions sound logical, the management of most of the estates are not in favour of either of these suggestions. The funny side of the matter is the type of medical bills issued by the medical practitioners who in time to come it appears, would issue medical bills for performing bypass surgery too in their rural dispensaries and another side is that medical bills issued by qualified surgeons have to be certified by estate dispensers! I am stating this to illustrate to what level this useful scheme has gone. I trust wiser counsel will prevail in gainfully and meaningfully operating this scheme by the employer and the employee. DAVID WILLIAMS - |
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