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ICICI Lombard Expert Blog

Long-Term Motor Insurance in the Works

June 03 2018

The Insurance Regulatory and Development Authority of India (IRDAI) has advised general insurers to plan for products that increase the number of vehicles with the mandatory cover. It is estimated that the long-term third-party policies would benefit stakeholders in the long run. Hence, the general insurers may plan to come out with a long-term motor third party (MTP) insurance policy for two-wheelers and cars.

The Supreme Court Committee on Road Safety has also suggested the general insurers to provide five-year policy for two-wheelers and three-year for four-wheelers. P. J. Joseph, member of IRDAI, communicated with the general insurers and encouraged them to design long-term motor third-party products. Despite being a mandatory law, more than 50 per cent of the vehicles plying on roads do not have third-party motor insurance.

The hassles of renewing the insurance every year would be reduced after a long-term motor third-party is launched, as it would bring more vehicles under the insurance protection net. It would also bring out stability for the policyholder concerning the rates. The higher number of insured vehicles would also increase the premium volumes for the insurance companies. Joseph said that more clarity on the information of the policy and pricing would emerge later.

The top executive of a leading general insurance company stated that the long-term policies would help increase penetration of third-party motor insurance and benefit the policyholders. He also mentioned that it would be a significant risk for the industry as the laws keep changing in a 5/3-year tenure and the loss might be high later on.

*Source: The Hindu

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