Design Four-Year Insurance Policies For Four-Wheelers, Proposes IRDA
Saar: The idea is to cover more people, most of the time.
After announcing a cut in third-party insurance premiums earlier this year, the Insurance Regulatory and Development Authority of India (IRDAI) is now proposing to have multi-year insurance policies rather than the conventional annual ones. According to a report published by ET Auto, IRDA has asked insurance firms to design long-term third-party insurance products. To ensure most people are insured most of the time, it has proposed to have at least a five-year insurance policy for two-wheelers and a four-year insurance policy for four-wheelers.
In a notification to companies, IRDA reportedly said:
“While these products would be filed under the file-and-use procedure laid down in the product filing, pricing will be dealt with separately.”
According to IRDA figures, around 50 per cent of the vehicles plying on the roads of the country are uninsured, despite having a valid motor insurance is mandatory by law. Multi-year insurance policies will not only help in roping in more vehicles under the insurance cover but also reduce the pain of renewing insurance policies every year, which is what the current scenario is. Moreover, the policyholder has some stability in rates for a defined period, IRDA reportedly said.
For such insurance products, IRDA will decide the rates. IRDA revisits the fate of insurance premiums, whether they should rise, fall or stay stagnant, every year. As the country entered in the current fiscal year, the insurance regulator announced a noticeable cut in third-party insurance premiums for personal cars and taxies. While premiums for the former received a cut by up to 10 per cent, the latter got a reduction by 17 per cent.
For personal cars with the engine capacity of up to 1,000cc, the insurance premiums dropped by 10 per cent. For those with engine sizes ranging between 1,000cc to 1,500cc and for SUVs with an engine size above 1,500cc, the premiums came down by 8.5 per cent.
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