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Rail Travel Insurance

 
Railway minister Suresh Prabhu has announced that travel insurance policy will be made optional for passengers. This presents a big opportunity to insurance companies as railway sector carries over 25 million passengers a day. Indian domestic travel insurance market is about 8 -10% of the total travel insurance market of `500 crore. Of the current domestic travel insurance market, a major chunk is generated from the airline sector. The move will only help to increase the penetration of travel insurance in India, through the railway sector.

1. Why should you buy travel insurance while commuting by train?

People travelling by train are equally susceptible to acci dents and other problems similar to other modes of transport such as road or air. A travel insurance policy would cover the hazards of losing out the baggage, loss of ticket and personal accident, industry experts say . However, the modali ties are yet to be worked out.

2. Where can one buy rail travel insurance policy?

The option will be made avail able to rail passengers when they buy ticket through IRCTC. Passengers may have to choose from a number of companies that Railways Ministry decides to tie up with, unlike air travel where car riers tie up with one insurer.

3. What would be the premium and the coverage?

The ministry is likely to decide on one premium, as is the case with the Pradhan Mantri insurance schemes. This could, how ever, differ depending on the route and the distance, experts say.

4. What does it mean for the railways?

IRCTC will become the agent for insurance companies. It will earn a commis sion of 15% on every policy sold, improving the prospects of railways and bringing them additional income. Assuming the premium is fixed at `10 per ticket, with close to 1,000 crore people travelling by railways annually , and everyone opting to buy travel insurance, IRCTC could make a commission of `1,500 crore by selling insurance tickets.

5. What happens when passengers don't have an insurance cover?

The government pays a sum of `4 lakh from its relief fund when a passenger dies while travelling by rail. However, the amount disbursed in a disability resulting from the the accident is less than `2 lakh. Earlier, the government had floated the idea of partnering with one insurance company where insurance premium would be clubbed with ticket price. Now, the ministry of railways has decided to make it optional.

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