Insurance Regulatory Commission introduces compensation package

The Insurance Regulatory Commission of Sri Lanka has introduced an alternative system for providing compensation, subject to a maximum of Rs. 500,000, to third-party victims of motor vehicle accidents or their legal heirs without Court proceedings.

This alternative method has been introduced in consultation with the Transport and Highways Ministry, other stakeholder organizations related to the transport sector, and the Insurance Regulatory Commission of Sri Lanka. It is implemented from March 1, as announced by the Insurance Regulatory Commission of Sri Lanka.

The Sri Lanka Insurance Regulatory Commission emphasizes that even with the implementation of this new system, the right to receive compensation under the existing legal system will not be affected.

Pedestrians and cyclists who are killed or permanently disabled in a motor vehicle accident are eligible under this scheme, with the relevant compensation being offered by the insurance company that has insured the motor vehicle involved in the accident. Thus, the motor vehicle involved in the accident must have at least third-party motor vehicle insurance issued by a general insurance company registered with the Sri Lanka Insurance Regulatory Commission.

To obtain compensation, the application provided in Circular No. 03 of 2024 issued by the Sri Lanka Insurance Regulatory Commission should be completed, and the specified documents therein should be submitted to the insurance company that has insured the motor vehicle involved in the accident within six months of the death or permanent disability, as stated by the Insurance Regulatory Commission of Sri Lanka.

Compensation will be paid to the concerned victim or their legal heirs. In the event of death, Rs.500,000 will be provided and in the case of permanent disability, up to a maximum of Rs.500,000 subject to the limits mentioned in the relevant circular will be paid. The Commission specifies that as a precondition for receiving this compensation, death or disability must occur as a result of the motor vehicle accident and within 12 months of the accident.

Furthermore, the relevant parties must submit a compensation application form to the respective insurance company within six months of the death or permanent disability. However, if the compensation obtained under this system is deemed insufficient for the victim or their legal heirs, the Sri Lanka Insurance Regulatory Commission states that there is the possibility of filing a lawsuit in court to seek appropriate compensation.

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