Are industrial accident victims adequately insured?

The value of losing your eyes in an industrial accident in India ?Rs 25,000. Shocking as this may read, it is embedded in the The Public Liability Act, 1991, and this is what the insurance cover entails in the Public Liability Insurance Act, 1991. If you dwell a bit more on the compensation package, check these shocking figures for yourself. For permanent total or permanent partial disability or other injury or sickness, the relief will be reimbursement of medical expenses incurred, if any, up to a maximum of Rs 12,500 in each case and, cash relief on the basis of percentage of disablement as certified by an authorised physician. The relief for total permanent disability will be Rs 25,000.

Ingrid Christensen, senior specialist on occupational safety & health, ILO, points out that the ILO has laid down standards that businesses should adhere to ensure that all appropriate measures are taken to prevent major accidents; minimise the risks of major accidents and minimise the effects of major accidents. ?Its constituents have adopted certain conventions and recommendations, code of practices. The Prevention of Major Industrial Accidents Convention (No 174) was adopted in 1993, together with the Prevention of Major Accident Recommendation (No 181). This Convention was prompted by the various industrial disasters in the ?70s and ?80s? Flexborough, Seveso, Bhopal, Mexico, etc. The Conventions become binding for the countries once they ratify a particular Convention. The Prevention of Major Industrial Accidents Convention was ratified by India in June 2008.? Accordingly, hazard installation employers shall establish and maintain a documented system of major hazard control which include provision for, technical measures, safety systems, including training and instruction of personnel, the provision of equipment in order to ensure their safety, staffing levels, hours of work, among others.

But not much is followed on the ground. Shankar Venkateswaran, director, social policy, SustainAbility, says insurance is just a part of the overall business environment. Venkateswaran explains that any liability of a company must be reckoned on the basis of three core principles, business is a creation of society to serve society?s interests and not vice versa; so society, and hence people who are victims of business action, have to be at the centre of determining any remediation. Second, once it has been established that the victim has been affected for no fault of hers or his, then the remediation must be complete and all actions must be aimed at restoring status quo. And third, valuing a life cannot be based purely on their income generation capacity as is seemingly the case now? a life is a life and has to have some minimum threshold above which one can add current or potential income generating capacities; a poor unemployed person has a societal value and we as a people need to start recognising that.

Venkateswaran adds if one were to follow these principles, then the basis for arriving at these relief amounts have to be evidence-based, transparently discussed and agreed. For instance, the limit on medical expenses will have to be calculated by looking at evidence based on several accidents and the expenses actually incurred for treatment. This is particularly so because the reality is that the public health system is in such a disarray that most, including the poor, actually have to depend on private health providers (business cannot ask for incentives for privatisation of health care on the one hand and then argue for low compensation assuming that the public system will take care of the victims?this is classic externalisation of costs). The compensation offered does not create any deterrent to negligence?wilful or otherwise?let alone preventing culpability! The insurance system needs to play a big role, there is a case of separate industrial accidents insurance products that not only provide one-time relief and hospitalisation benefits (which many insurance products already offer) but also out-patient treatment, especially covering the cost of medicines. Venkateswaran adds, ?The Bhopal tragedy clearly showed that safety is too important an issue to be left to a company, especially when mitigating risks costs them money. At the same time, a corrupt and inefficient regulator is not the answer. Insurance brings in a third party who has a stake in preventing accidents and perhaps provides the check and balance that is most required.?

Vepa Kamesam, MD, Institute of Insurance and Risk Management, says under the present statute, the compensation levels are meagre and there is absolute necessity to amend the statute raising the compensation levels, for death to Rs 5 lakh and for injuries to Rs 1 lakh. Also central and state governments and local bodies are exempted to take the insurance policies which is mandatory to all other industrial manufacturing units. Kamesam questions that when the aircraft liability is Rs 5 lakh and railway liability is Rs 2 lakh and when motor vehicle liability is unlimited, why this public liability compensation should not be raised to Rs 5 lakh and Rs1 lakh, respectively, for death and injuries. He adds, ?Assuming that same type of accident like Bhopal gas tragedy would have occurred in the West, the monetary compensation would have run not less than $5 billion, by which you can guess the difference between Indian and Western model of liability payments.?

While calculating the risk, insurance companies follow a basic definition of risk. Karuna Raina, energy campaigner, Greenpeace, explains a basic definition of risk is risk=probability x consequences. The ?risk? is the risk of a catastrophic accident, ?probability? is the likelihood of an event happening, ?consequences? are the effect that event has on people, property and the environment. Even if the probability of an accident is relatively low, the risk is still very high because the consequences are disastrous. The amount of money for which insurance is done should mirror that risk. Also, one cannot put a blanket cap on plants; the capacity of the plant as well as the density of population should be kept in mind before a insurance figure is arrived at. A scientific study of the site should be done before fixing an insurance amount, as it?s important the insurance amount mirrors all the risk.?

?Unsettling Truths, Untold Tales?, a study published by International Environmental Law Research Centre, points outs that in the Public Liability Insurance Act, based on the no-fault principle as contained in Section 3 of PLIA, the total outgo for one accident has been limited to Rs 5 crore and what set out to be a compulsory statutory insurance to meet contingencies for payment of interim compensation in the event of accidents in hazardous industries has been reduced to a compromise favouring the industry. There is a cap now on how much liability will be assumed by the insurer. Working of the PLIA depends on the local administration which is empowered to disburse the interim compensation.

Ashish Kothari, founder, Kalpavriksh, says two aspects are important. All lives in India must be held to be equally important/valuable. If victims in air crashes can get much larger compensation, why not those in industrial accidents? Also compensation is one thing, liability is another…owners/managers of industries must be held absolutely liable for accidents. For too long have corporations gotten away with lax (often atrocious) safety conditions, we should have instituted much stricter liability and higher compensation legislation.

Rahul Aggarwal, director, Optima Insurance, adds, ?The compensation did not look so pathetic 20 years back when the law was enacted. Unfortunately, the compensation value has remained frozen while inflation has eroded the value of these numbers. Maybe a clause for indexation should be added in the law to maintain the value of the numbers.?

Supreme Court lawyer Rajeev Dhavan terms the Act as a damp squib and calls for it to be replaced by a civil liability Act. ?After Bhopal there is a historic urgency to not just amend the the Public Liability Act, but to replace it with a civil liability Act that is not as limited as this is. We have to look at absolute liability.?

Pushpa Girimaji, consumer rights activist, asks how can Rs 12,500 as medical reimbursement suffice. She adds that even though the Act states that it provides for immediate relief for industrial accident victims in case of claims exceeding the above limits, it is to be met by the Environmental Relief Fund to be set up under Section 7A of the Act and managed by the authority appointed by the Central government. And the liability beyond the total of the insurance and the relief fund is to be borne by the ?owner?. We know how committees for relief funds are set up, at what speed and how funds are disbursed. After the accident there is immediate media attention and big promises are made, but it takes considerable follow-ups and time to claim due compensation.

Girimaji draws attention to the October 2006 PIL filed in Madhya Pradesh, High Court by Gyan Prakash, alleging that mandatory provisions of the PLIA, 1991, and the Public Liability Insurance Rules, 1991, were not being complied with by ordnance factories in MP. He alleged that a number of fires and accidents took place in the factories, and in storage and transportation. Gun Carriage Factory, Jabalpur; Vehicle Factory, Jabalpur; Grey Iron Foundry, Jabalpur; Ordnance Factory, Katni, and Central Ordnance Depot, Jabalpur, had not taken out insurance policies. She adds that if government factories are not abiding by the public liability insurance rules, how can we expect others to adhere to them?