The Insurance Fund Office (IFO), set up in 2010 to oversee the implementation of third-party insurarance, is about to be restructured into an Agency, if an amendment to the existing third party insurance proclamation becomes law.
The restructuring is necessary in order to endow the Office with greater regulatory powers, a source closely tied to the issue told Fortune. This is especially necessary when it comes to soliciting information from insurance companies, according to the source.
The Office had come into existence after all vehicles were required to get coverage against third party risks, which includes any person, other than the insured or members of the insured's family, through a proclamation ratified in 2008. It started implementing the provisions of the proclamation in September 2011, giving all vehicles in the country a period of four months to get registered, or face penalties.
Up until now, it has been responsible for; setting tariff rates, providing windshield stickers and certificates, and handling all emergency medical and other third party risk claims, for untraced or uninsured vehicles.
Moreover, it administers the Insurance Fund, a special account at the National Bank, where a 10pc cut from all third party insurance premiums, collected by insurance companies, is deposited. It uses this fund to pay for untraced or uninsured vehicles. As of September 30, 2012, the Office had collected a total of 33.9 million Br, for the Insurance Fund, from 398,971 vehicles.
Alongside the implementation, however, the Insurance Fund Office (IFO) has also been working on amending several provisions within the third party proclamation.
Aside from increasing liability coverage for emergency medical treatment and bodily injuries, the amendment also envisions upgrading the Insurance Fund Office into the Insurance Fund Administration Agency.
An Agency can hire more people and have more regulatory reach than an Office, according to experts at the legal department of the House of People's representatives.
An Office almost serves as a secretariat, implementing already passed decisions, but an Agency has more leeway in passing decisions itself, and regulating the sector it is employed in.
"The Office of the Fund has to oversee whether Insurance companies, who have to provide coverage, are following the law," the source close to the issue told Fortune.
Exactly what kind of information it is that the Office requires from Insurance companies is yet to be determined by a directive.
Officials from the Office were unavailable for providing official comments, stating that the process is still in its early stages.