Vehicle insurance to be mandatory; Cabinet okay law amendment

The Cabinet, chaired by Prime Minister Sheikh Hasina, has today approved the draft Road Transport Amendment Act, 2024, reinstating mandatory insurance for all types of vehicles operating on the roads, including motorcycles, private cars, buses, and trucks. The decision revises the Road Transport Act of 2018, which had made vehicle insurance optional.

Under the new draft law, vehicle owners lacking insurance will face a penalty of Tk 3,000. This amendment introduces a sub-section to enforce insurance compliance, addressing a gap in the existing legislation that did not penalise non-compliance with insurance requirements. The amendment aims to align Bangladesh's road transport law with global standards, ensuring no vehicle operates without insurance.

The Financial Institutions Department of the Ministry of Finance had previously proposed this amendment, underlining the government's potential revenue loss from non-mandatory insurance, estimated at Tk 878 crore annually. The amendment seeks to rectify ambiguities within the Road Transport Act, 2018, specifically regarding insurance requirements and penalties for non-compliance, thus ensuring clearer enforcement and compliance standards for vehicle insurance.