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  • Insurance You will get up to 17.5% first year commission in long term motor insurance policies

    You will get up to 17.5% first year commission in long term motor insurance policies

    IRDAI has asked insurance companies to issue long term motor insurance policies having at least 5-year cover for two wheelers and 3-year cover for four wheelers.
    Nishant Patnaik Aug 30, 2018

    Come September 1, there will be long term motor insurance policies available for policyholders.

    In its recent circular, IRDAI has asked insurance companies to issue long term motor insurance policies having at least 5-year cover for two wheelers and 3-year cover for four wheelers. Insurers will have to issue these policies at the time of sale of new vehicles.

    However, it is not clear if such policies are applicable for the existing vehicles due for renewals. Experts believe that this long term policy is also applicable for existing policies due for renewal.

    With this, IRDAI has introduced six new categories under long term motor insurance policies for your clients.

    • 5-year third party insurance for two wheelers
    • 3-year third party insurance for four wheelers
    • 5-year comprehensive policy that comprises own damage cover for two wheelers
    • 3-year comprehensive policy for four wheelers with own damage cover
    • Bundled policy with 1-year comprehensive and 5-year third party cover for two wheelers
    • Bundled policy with 1-year comprehensive and 3-year third party cover for four wheelers

    On commission structure of agents, brokers and motor insurance service providers (largely automobile dealers), IRDAI has clarified that insurance intermediaries can get up to 17.5% of the first year premium of five-year two wheelers comprehensive motor insurance policies.

    Similarly, general insurance can pay up to 10% commission on the second and third year premium and 5% commission on fourth and fifth year premium of the policy.

    In case of three-year motor insurance comprehensive policy of four wheelers, IRDAI has capped first year commission at 15% on own damage cover. Subsequently, non life insurers can pay up to 10% and 5% of commission on second year and third year premiums respectively.

    On bundled policies, intermediaries can get up to 17.5% and 15% commission on five-year bundled policy for two wheelers and 3-year bundled policy for four wheelers, respectively.

    However, this commission structure is applicable only on premium charged towards ‘own damage’. Premium of comprehensive motor insurance policies has two components – third party and own damage.

    Remember that there will be no commission on third party motor insurance cover for both 5-year two wheelers and 3-year four wheelers.

    IRDAI has also asked insurance companies to incentivize these distributors with up to 30% of commissions as rewards.

     

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    5 Comments
    D B DESAI · 5 years ago `
    Long term issue of policies is good but at the time of renewal the policyholder might have changed his address, contact details like mobile number or email id. Insurance companies should send reminders in writing to the policyholders and should provide a list of renewals to the respective Agents also. It may also happen that within these 3 or 5 years the concerned Agent stops doing business with the Company. So more care has to be taken about timely renewal of the policies otherwise after 3 or 5 years the same situation may arise again.
    Lahu · 5 years ago `
    As per new india assurance circular can not give after 3 year Nil Dep cover for private car other company renewal . How can we do business private car
    Kevin Menezes · 5 years ago
    Sign up as DSA under pluskar services call 9909973125
    Reply
    K. Kannan · 5 years ago `
    it is difficult in reality. if a car owner want to dispose the car in second year what is the result?. I strongly believe that, this must be end user choice.
    Naveen Agarwal · 5 years ago `
    IRDAI has apparently done this to increase the insured % for third party claims. But has IRDAI ever clarified what % of insured population file for third party claims and of them how many are settled in time and amicably. Intelligent guess is very negligible. This is because third party claims process is very tedious and time consuming. And due to this insured ends up going for out of court settlement causing financial burden to the insured despite having a valid insurance. If this remains as is, forcing mandatory long term third party insurance does not help the insured at all and does not solve the root problem at all. Insurance companies are at benefit yet again.
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