The Insurance Regulatory Commission of Sri Lanka (IRCSL) has introduced an Optional Compensation Scheme (OCS) through licensed general insurance companies to provide compensation to third-party victims of motor vehicle accidents or their legal heirs. The OCS offers a payout of LKR500,000 ($1,657) on death and up to LKR500,000 for permanent disability, without having to go through court proceedings.

 The regulator said, “It’s important to note that despite the introduction of this new scheme, the existing legal avenues to seek compensation remain unaffected.” Implemented since 1 March 2024, this approach — which the IRCSL describes as a ground-breaking move—was developed in collaboration with the Ministry of Transport and Highways and other key stakeholders in the transport sector. It signifies a noteworthy shift in the insurance landscape, demonstrating IRCSL’s commitment to address the needs of third-party accident victims in a more efficient and compassionate manner.

Compensation is provided by the licensed general insurance company that has insured the motor vehicle involved in the accident, at least by a third-party motor insurance cover. To obtain compensation, applicants must complete the designated application form contained in a circular (No. 03 of 2024) issued by IRCSL, along with specified information, and submit it to the relevant insurance company that has insured the motor vehicle involved in the accident, within six months of the death or permanent disability caused by the accident.

 Compensation will be paid to the victim or his/her legal heirs. In case of death, the legal heirs will receive LKR500,000, while those facing permanent disability may receive up to LKR500,000, subject to the limits outlined in the circular. It’s worth noting that to qualify for compensation, the death or permanent disability must result from the motor vehicle accident and occur within 12 months of the accident. The regulator also said, “This initiative showcases the IRCSL’s dedication to providing timely and meaningful support to accident victims and their families. If the compensation provided under this scheme is insufficient, victims or their heirs have the right to pursue legal action to seek appropriate compensation.”