With an aim to offer a wider choice to customers in terms of motor insurance, insurance regulator Irdai aims to introduce three years of insurance coverage for cars and five years for two-wheelers.
The Insurance Regulatory and Development Authority of India (Irdai) has floated a draft on ‘Long-Term Motor Products covering both Motor Third Party Insurance and Own Damage Insurance’, reported news agency PTI.
Irdai has invited stakeholder comments by December 22 on the draft.
What does the motor insurance propose to cover?
The draft aims to permit general insurers to offer a three-year insurance policy in respect of private cars and five-year for two-wheelers, co-terminus with motor third-party liability cover.
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In such a case, the premium would be collected for the entire term of the policy coverage at the time of sale of insurance. The pricing would depend on sound actuarial principles, including claims experience, and long-term discount, according to the draft.
“The pricing of add-on and optional covers may likewise consider the cost efficiencies of policy administration,” the draft mentions.
It also said the existing No Claim Bonus (NCB) for one-year Motor Own Damage policies would also be applicable for long-term policies. The NCB applicable at the end of the policy tenure in case of long-term policies would be same as that would have been earned if such policies were renewed annually.
In case of long-term standalone Own Damage policies which are issued to be co-terminus with Motor Third Party Liability cover, nine-month policy tenure can be considered as full year for recognition of NCB during the year, it noted.
Apart from this, Irdai also proposed a draft on long-term fire and allied perils products. It has proposed a policy cover of up to 30 years for dwellings.
Dwellings include standalone residential houses, villa complexes as well as apartment blocks managed by housing cooperatives or resident welfare associations or any other body representing the home-owners.
Long-term fire insurance can be cancelled during the tenure of the policy
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