Indian state to pilot cashless accident trauma insurance

Published on Monday, 28 November 2016

Published by Saleha Waseem on Monday, 28 November 2016

Motorcycle in rural India
Motorcycle in rural India

Rohan was on his way back to his village after watching a late-night show of the latest Bollywood release in a nearby town. Humming a chart buster from the film, he was about to turn into his village when a speeding truck appeared almost out of nowhere, hit his scooter from behind, and sped away.

Ram Avatar, from the neighboring village and also on his way home, witnessed the accident and instinctively stopped. Rohan lay unconscious and Ram Avatar, who had seen many such accidents in the past, was almost certain that the young boy had suffered internal head injuries. The questions flashing through Ram Avatar’s head were: I don’t know the boy, should I get involved, since it is a police case? More importantly, who will pay the hospital?  The golden hour—the first 60 minutes after a traumatic injury, when prompt medical treatment is most likely to prevent death—ticked away.

Nearly 400 deaths take place on Indian roads every day. In 2015 alone, close to 500,000 road accidents resulted in 146,000 deaths, and left more than three times that number of injured. From 2005 to 2015, road accident fatalities have increased by an alarming 54%. As a signatory to the Brasilia Convention, India is committed to halve the fatality rate by 2020.

Although road accident victims in India are currently covered under the 1988 Motor Vehicle Act (MVA), medical expenses incurred at the hospital need to be settled before the victim is discharged. The road accident victim then seeks reimbursement by making a claim against the third party responsible for the accident. The majority of claims filed under the MVA are handled by social motor vehicle tribunals, and very few are settled by insurance companies. The process is time-consuming and can take 18 to 24 months. In addition, the claimant has to bear the expenses of engaging a lawyer.

The question remains – what about the immediate needs of the victim for trauma care during the initial period after the accident? Maybe we have the solution.

ADB recently approved the $500 million Madhya Pradesh District Roads II Sector Project, which aims to reconstruct and rehabilitate 1,500 kilometers of major district roads across the state, thereby mainstreaming rural areas and improving connectivity to commercial markets. Under the loan, the Madhya Pradesh Road Development Corporation will pilot a cashless accident insurance scheme in non-urban areas of 3 to 4 districts.

Madhya Pradesh was among the first states in India to take action to manage road accident fatalities. In 2015 the state reported 54,947 accidents and 9,314 deaths. Recognizing the seriousness of the situation, the Madhya Pradesh government initiated an accident response system linked to ambulance services through the state.

Now, with ADB support, Madhya Pradesh will pilot an insurance cover for accident trauma care. Any road accident victim in the areas covered by the pilot scheme will be transported to accredited clinics or trauma centers to receive immediate medical aid. The cost of treatment for the first 48 hours—with an indicative ceiling of Rs30,000 (about $500, the final amount will be confirmed after the studies are completed) will be borne by a group insurance plan. The insurance premium paid by the state will be reimbursed through ADB financing.

If the pilot is successful, it will help to set up a post-accident response initiative that can be scaled up in Madhya Pradesh and beyond.  

Similar pilots are being tested by India’s Ministry of Road Transport and Highways on national highways such as NH-8, running from Jaipur to Gurgaon and Vadodara to Mumbai, and the NH-33 Highway from Ranchi to Muhulia. Data gathered from these pilot projects can be used to formulate a pan-India scheme for cashless treatment of road accident victims. 

If implemented, such an initiative will help improve the survival chances of accident victims and bring down substantially the current 30 deaths per 100 accidents ratio in India.