Note from Editor
Insurance, at its core, is a social contract—a mechanism to protect lives, livelihoods, and property. Yet, in the operational cycle of claim settlement, one crucial area remains largely unaddressed: salvage. The advent of India’s first-ever patented solution on Insurance Salvage by InsurancePe is a landmark moment that calls attention to a long-ignored dimension of the industry.
Salvage is more than just a legal leftover post-claim; it represents the residue of misfortune, and how we treat it reflects the ethical underpinnings of our industry. For decades, vehicles declared as total losses—whether from accidents or floods—are quickly auctioned off to dealers who refurbish and resell them, often without transparent disclosure. This puts unsuspecting buyers at risk and increases the probability of repeat accidents, undermining the very objective of insurance—public safety and trust.
The issue is not just legal; it’s moral and pragmatic. Are insurers merely claim-settling entities? Or should they embrace a more humanistic responsibility—ensuring that what comes out of a claim process does not inadvertently endanger others?
This editorial marks the beginning of our exclusive Insurance Patent Series, starting with this revolutionary patent on salvage. It is time we go beyond compliance and start embedding compassion, foresight, and responsibility into our insurance practices. At The Insurance Times, we applaud this initiative as it redefines the insurer’s duty—extending it beyond policy issuance and claim payout, to ensuring post-claim safety for all.
This series will not just showcase innovation, but also ignite vital conversations on transforming insurance from a transactional model to a truly protective, ethical institution. Let us make insurers humane. Let us make insurance matter—beyond the claim.
Dr. Rakesh Agarwal, Editor, The Insurance Times
This is the first article on the Insurance Patent series for The Insurance Times Magazine. In this article, we will deal with the background of this patent – How the idea for this patent germinated. What would be the use of this patent? Whether this patent can be commercialized to ensure the safety of millions?
We, at insurancepe, have been a part of the insurance industry for a long time. For others, insurance might be a foreign language. In our homes, even at the dining table, there has to be some insurance discussion. In other words, insurance is a part of our life.
We witness many accidents every day. When I talk about accidents here, I mean motor accidents – 2 Wheelers, 4 Wheelers, 6 Wheelers, etc. Whenever we travel from one place to another on the national highway, say, from Delhi to Ambala, we come across beautiful 6-lane highways – these roads are in pristine condition, and they are meant to be a high-speed driving experience. Along such highways, you also come across many vehicles lying on the side of the road after an accident – discarded, unasked, and neglected. I guess, in all probability, the unfortunate vehicle owner, assuming he is alive, must have collected the insurance money from his insurer, and the insurer must have taken the salvage.
According to Insurance Law, if a vehicle is a Total Loss, the salvage becomes insurer’s property once the claim is settled. We have dealt with many cases such as these, hence unlimited experiences of these accident vehicles. I have witnessed a few such accidents with my own eyes – deaths, blood, crash sounds, splintered glass, pitiable cries – unforgettable!
The seat covers splashed in red, and the road traffic slows down for few seconds. The police arrive and clear the vehicle from the site. Ambulance takes the deceased/ injured to the hospital – and the traffic, in a matter of moments, moves on as usual.
The Motor Vehicles Act says insurance is compulsory. And by insurance it means it’s “third-party insurance” that is mandatory. But generally, people insure for Own Damage as well as third-party. The debris of the vehicles lying around the roads – some are collected, taken away, towed away by agencies associated with the insurance companies, or the salvage of a particular insurer is purchased by a specific salvage dealer. Some of the vehicles are not worth towing away, according to the salvage dealers, because the towing cost is more than the cost of the salvage itself! They lie there forlorn. We behave, each of us, as if nothing has happened. Business is as it should be.
Ships sink; we talk of salvage. Airplanes crash; we talk of salvage. Buildings burn: we talk of salvage. Loved ones die, we talk of salvage/ memorial diamonds. Where exactly does the responsibility of the insurer end in a claim? The moment the claim is settled, salvage is sold? If this is only the responsibility of the insurer, then it can be said that insurance companies are more interested they can be reproached in making money, not in public safety.
During those long, endless mornings, our discussions revolved around: when does the responsibility of an insurer end? This is not a moral question, but a pragmatic one. Insurance companies must be humanistic in the sense that they must show love, affection, concern, and responsibility towards society. We have invented one of the best lego-logical ways to go beyond the presently defined boundaries of insurer responsibility – i.e. to go beyond claim settlement.
A vehicle can be considered as total loss if it is inundated. If a vehicle is totally inundated, it is a Total Loss. Now look at the anomaly, the contradiction. The flood recedes; the cars remain – completely soaked, drenched, inundated, and ruined beyond repair by the floodwaters.
I must refer to the case of a flood in Chennai few years ago where the insurer auctioned away all those vehicles. I request the readers to follow the logic carefully. Salvage dealers purchased the salvage of these vehicles – including BMWs, Mercedes, Lamborghinis, etc., and simple vehicles like Maruti Suzuki 800, Alto etc. The insurers have fulfilled their responsibility. They followed the law in letter. They settled the claims, and sold the salvage.
They followed the law in letter; but violated it in spirit. The salvage dealer then took these vehicles apart, replaced the bad parts with good ones from old vehicles, and while the body of these vehicles remains the same), the salvage dealer, after re-painting these vehicles, sold these cars in the market as a used car at an attractive price! Any uninformed man would be very glad to buy one of these vehicles because he feels he’s getting it cheap. He and his family would love to have a ride in that vehicle.
What the insurer, the salvage dealer, and the new owner who acquired the refurbished vehicle do not know is that the vehicle poses a danger to all on the streets. A refurbished vehicle – a vehicle that is redone is not safe. It is not worth being on the road, but it is on the road, and God alone knows how! It is a potential time bomb and can explode at any time causing irreparable damage to society!
Then when does the responsibility of an insurer end? Being insurance professionals, we appreciate when the claims settlement ratio is 98.9%, but is that all? The money being paid out for these claims does not belong to the insurer. Though insurers are here to earn profits, it must not be forgotten that the money belongs to the policyholders – the fortunate many paying for the unfortunate few. People’s money for people’s welfare is especially true in the insurance sector. How is this Guardian Knot to be unknotted? How is this apparent financio-moral dilemma be answered?
This was the first step we took towards the patent. The final objective of our six-year thought process which resulted in an invention and a patent is about how to make insurers humane. After having taken this first step, we intuitively knew, what the last step has to be.
Authored By:
Dr K. Rajagopal Reddy
PhD, FIII, FCII (UK), FLMI (US), FT
Chartered Insurance Practitioner
Topspot Insurance Broking Pvt. Ltd.
