Industry officials say that IRDA will allow such extension in comprehensive policy (both third party and own damage cover) for four wheelers in the coming months.
IRDA has allowed general insurance companies to provide third party cover for a tenure of three years for two wheeler segment. Third-party motor insurance is mandatory in India.
In a circular, IRDA has said, “The authority has perused the matter and decided to introduce standalone motor third party insurance policy for two wheelers for a period of three years.”
However, the premium of such cover cannot exceed thrice the value of the annual premium. Also, the premium rate cannot be revised till the term of policy irrespective of IRDA’s annual revision of motor third party premium. In addition, the insurers will have to refund the premium of unexpired years in case of cancellation of policy under loss premiums.
Earlier in March, IRDA had announced a marginal hike in third party motor premium rate of two wheelers. While the revised premium for engine of 75-150cc is Rs. 464, the regulator had kept it Rs. 884 for vehicles of 350 cc.
The insurance regulator is likely to come out with such extension in comprehensive cover of four wheelers segment. “The authority is also conscious about the fact that there is a need of long term comprehensive (own damage as well as third party) cover also,” said IRDA. Industry officials expect that IRDA will come out with such extension for four wheelers in the coming months.
A
Mumbai based distributor is of the view that insurance companies may not opt
for this option. “The chances of a hike in motor third party premium are high.
It doesn’t make sense for insurers as they cannot revise the premium rate in
such policies. Also, the loss ratio in motor third party cover is too high.
Such option will be helpful in comprehensive cover of motor insurance segment.”