Two-wheeler owners will soon be able
to buy a motor insurance policy for a period of three years. The Insurance
Regulatory and Development Authority (Irda) has allowed insurers to launch a
long-term cover. Realising the need for comprehensive coverage, the regulator
has also asked insurers to file for a three-year term comprehensive policy.
The move will help insurers in
cutting down their administrative costs. But experts say insurers will not be
able to pass on the benefit to policyholders as premium rates are decided by
the regulator. Amitabh Jain, head, motor underwriting and claims, ICICI
Lombard, says, "The current guidelines issued by Irda allow companies only
to issue third-party long-term twowheeler policies, where the premium to be
charged is defined by Irda (tenure X current third-party premium). Thus, the
customer benefits as he is not charged for future inflation."
Insurers will not be able to revise
the rates during the tenure of the policy. They will also not be able to cancel
the policy in any circumstances except in case of total loss. Tapan Singhel,
managing director and chief executive officer, Bajaj Allianz General, says,
"It's a welcome move as s two-wheelers on the road are uninsured."
Motor insurance cover has two
components-own damage and third-party insurance. While own damage cover
protects your vehicle against damage and theft, third-party cover protects
losses to a third party. Premium rates for own damage cover were de-tariffed by
the insurance regulator in 2007. Third-party premium rates are, however, still
regulated by Irda.
Third-party
premium rates are revised every year. For 2014-15, the rates have been
increased by 20% for private cars and by 10% for two-wheelers. For private
cars-with engine not exceeding 1,000 cc-rates were increased from Rs 941 last
year to Rs 1,129. For cars with engine exceeding 1,000 cc but not more than
1,500 cc the rates were increased from Rs 1,110 to Rs 1,332.
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