Posted on July, 2019 by PINC Insurance
In a developing nation like India, the disposable income of people is on an incremental rise. Every year auto sales are rising by about 6% CAGR, making motor insurance play a crucial role for the buyer. Generally, comprehensive insurance policy has two components, own damage and third-party damage. Amongst this, the bifurcation is such that a major chunk of the premium (about 90%) is attributable towards own damages, however, only about 10% is available for the third-party.
In the wake of such a situation, the IRDAI (Insurance Regulatory Development Authority of India) has passed on a new circular which will be effective from June 16, 2019. The overall cost of insurance i.e. the premium will see a spike of about 12.5%, impacting the cost for an annual third-party insurance. However, the costs for the multi-year third-party insurance remain intact.
The Supreme Court’s ruling last year made it mandatory for all vehicles to buy third-party insurance following which IRDAI made a norm for all the vehicles bought after September 1, 2018, to buy multi-year third party insurance. New two wheelers and four wheelers are mandated to buy third-party insurance for five year period and two year period respectively, further they have to pay the consolidated amount upfront. An amendment circular passed this year, changes the above numbers to a compulsory one-year purchase with an option to extend it by another year.
A new categorization in the bus grouping has made the insurance more feasible for the third party. The premium for the school buses have risen by 5%, however, the premium for the other buses category has been raised by 10% since the risk associated with a school bus is less. In the electric vehicle (EV) ecosystem, the IRDAI has issued a discount of about 15%.Currently, the electric vehicles category forms a very small part of the automobile industry; however, the numbers are set to witness exponential growth in the near future.
The notification has mandated across insurance companies and brokers,that third party insurance be made available at their underwriting offices and online channels. No insurer can cancel old policies and issue fresh policies at new premium rates. The new policies and rates are sharedwith policy holders and everyone involved in the ecosystem.Onlineinsurance brokers simplify the languageabout these notifications in their bulletins and updates. Constant awareness about product andpolicy details helps the end consumer make a conscious decision when purchasing a motor insurance and availing benefits.
Let's brace ourselves from uncertainties on the road. Visit www.pincinsure.com to enquire about motor insurance.