Insurance sector regulator Irdai has come up with a proposal to increase coverage duration of motor insurance so that vehicle owners do not have to renew their vehicle insurance policies every year. If its proposal gets implemented, then a car owner can buy a three-year insurance policy and those owning a two-wheeler can purchase a five-year policy.
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’.
The draft proposes to permit all general insurers to offer three-year insurance policy in respect of private cars and five-year for two-wheelers, co-terminus with motor third party liability cover.
The premium for the entire term of the policy coverage would be collected at the time of sale of insurance.
The pricing, as per the draft, would be based on sound actuarial principles, including claims experience, and long-term discount.
“The pricing of add-on and optional covers may likewise consider the cost efficiencies of policy administration,” said the draft, on which the Irdai has invited stakeholder comments by December 22.
It also said the existing No Claim Bonus (NCB) for 1-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 poli-cies were renewed annually.
In case of long-term standalone Own Damage policies which are is-sued to be co-terminus with Motor Third Party Liability cover, nine-month policy tenure can be considered as full year for recog-nition of NCB during the year, it said.
Irdai has also come out with 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 resi-dent welfare associations or any other body representing the home-owners.
Long-term fire insurance can be cancelled during the tenure of the policy
