Soon Auto Insurance Policies to Provide Two-Year Coverage : IRDA

The Insurance Regulatory and Development Authority (IRDA) is planning to provide 2-year insurance term coverage for auto insurance policies. The move will enable vehicle owners to insure their commercial or private vehicles for two-year term at a time and allow the benefit of low premium cost and reduced renewal hassles to its customers.

According to government officials, IRDA may increase 2-year term to 5-year term later in near future. Government suggested insurers to provide coverage linked to the registration and fitness certificate.

According to the IRDA chairman, as of now the premium income is low but the liability ratio has increased. So, in order to increase persistency, the period of cover shall also be increased. Moreover, the decision regarding “no claim bonus” is to be factored and scrutinised.

According to finance ministry, long-term insurance cover will improve the motor insurance cover as most vehicle owners do not renew their cover. It is observed that motor insurance is the only loss-making business for most insurers, as insurance policies are not renewed at the same rate at which claims are made.

Source: The Economic Times