[blackwasp]

The Insurance Regulatory and Development Authority of India (IRDAI) has released a circular announcing the withdrawal of long term package plans including 3rd party insurance as well as own damage. The withdrawal will be effective from August 1, 2020.

Some of the reasons mentioned by the IRDAI include challenges in actuarial pricing for long term own damage policies, distribution of polices is difficult, it is an expensive proposition, and a possibility of owners selling their vehicles due to financial reasons / default in loans. IRDAI also mentions that customers of the said policies would be burdened with the same insurer if they get deficient service and calculation of no claim bonus (NCB) is not uniform, leading to confusion amongst policy holders.

The Supreme Court had issued a circular on August 28, 2018 directing all insurers to offer only 3 and 5 year policies for new 4-wheelers and 2-wheelers respectively. The applicable date for this rule was September 1, 2018. Since September 2019, the insurers have also been offering stand-alone own damage covers, including for fire and theft.





Link to the Team-BHP News

[Reinhard]

Basically similar to TRAI (with the DTH fiasco), IRDAI is now taking away convenience from consumers to provide higher revenue for insurance companies.

I have been using the 3 year insurance from BajajAllianz for my own & family members' 2 wheeler vehicles since many years now. It was very convenient. I didn't even care about whether it was economically any better or not. The sheer convenience of not having to remember renewals for 3 years trumped everything so far.

Good going IRDAI.

[Sran]

Good move by IRDAI. Supreme Court should end over stepping in matter regarding to policies. This 3 year mandatory insurance was hard on pockets for new car buyers and only led to confusion. The 2 years mandatory third party premiums doubled the initial premium payments.

The mandatory third party policy was again a show of mental bankruptcy by our policy makers who always look to weste and implement their policies for our problems. The days are not far away when amerikan type motor insurance policies will enter India and instead of cars the insurance will be ridden on drivers and their driving habbits, previous accidents, marital status, credit score, asset ownership, age, gender and location. The lack of understanding of India's sociological and economical background by our professional policy makers will somehow also bring in monthly insurance policies. Those American premiums are already sexist as premium charged to males are higher than females. Then age and health conditions also drive up the premiums. To not have money to pay premium is another matter but to forget paying premiums excuse does not suit adults. It is a basic life skill.

Off topic: Now if IRDAI can shut the digital insurance companies who have no office, employ part time surveyors, cheat customers with lower premium amounts and false promises just to take money while their settlement ratio is near 80% and in that too the amount paid is less than their rivals, it will be commendable.

[vikred]

Originally Posted by Sran

To not have money to pay premium is another matter but to forget paying premiums excuse does not suit adults. It is a basic life skill.

Well said. Coming to think of it, it's pretty hard to miss renewal reminder SMSes, emails and telephone calls from insurance companies. Or, you can set up calendar notifications in your smartphones to get reminded. Or, you can even set up autopay (some insurers offer it).

Longer term policies don't always make good financial sense for the majority of the people. More so because, we don't have the concept of refunding consumers when policies are cancelled. 3/5 year policies should not have been made mandatory (for new vehicles) in the first place. On the flip side, given that most of the people in India don't renew their policies, it was good to have a long term policy sold with new vehicles.

[nagr22]

Probably they realized that its profitable to increase 3rd party premiums every year rather than letting the users lock in to a lower price.
While there are so many much needed reforms pending for auto insurance, IRDAI is busy wasting time in making and then scrapping pointless rules like this. Instead they can focus on,
1. Making 3rd party claims simple in cases where both parties mutually agree whose mistake it is. This will remove the unnecessary need to involve police and courts in cases where the fault is obvious. Make the current process mandatory only in cases of human harm involved.
2. To make point 1 possible, link 3rd party premiums with driver history.

Rather than these, they are busy debating whether it should be sold for x years or y years, set absurdly high premiums based on arbitrary engine capacity and parallelly increasing premiums every year while providing absolute no service at all!

3rd party insurance in India is the most useless expenditure that we common people make!

[ethanhunt123]

Sorry to pop the bubble - but IRDAI is only withdrawing Long term self damage policy packages. The 3/5yr third party rule still remains - just that now you wont have the option of buying 3yr/5yr self damage along with it. Will make a difference to hardly 5% of people who took entire package policy.

We still have to buy 1yr self damage + 3/5yr third party package as usual. IRDAI cannot over rule Supreme Court judgements.

[tarik.arora]

Originally Posted by ethanhunt123

Sorry to pop the bubble - but IRDAI is only withdrawing Long term self damage policy packages. The 3/5yr third party rule still remains - just that now you wont have the option of buying 3yr/5yr self damage along with it. Will make a difference to hardly 5% of people who took entire package policy.

Exactly, i was about to post this. From what I also understood, only the own damage part has been withdrawn. Anyways, not many people were opting for it. Just a click-bait move.