IRDAI okays autonomous self harm policy



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The Insurance and Insurance Regulatory Authority of India (IRDAI) has authorized insurers, effective as of September 1, to issue self-contained (DO) damage cover for new and old cars and two-wheeled vehicles.

"Consequently, issuing aggregate policies for cars and two-wheeled vehicles will not be compulsory," the regulator said in a partial modification of a circular issued in August in the context of a Supreme Court order.

Policyholders have the option of renewing the DO component of a combined coverage due on or after September 1, 2019, with the same or different insurer, on an annual basis, the most recent circular about the IRDAI said.

However, insurers will continue to have the option of offering package policies as well as independent policies of OD and TP (third parties). In the long run, the independent DO policy will not be allowed for the present, the regulator said. Last year, implementing the guidelines of the Federal Supreme Court, the regulator had introduced long-term third-party coverage for new vehicles – three years for cars and five years for two-wheeled vehicles.

In so doing, it gave insurers the option of providing long-term coverage for the package, including motor and TP insurance for three or five years, as the case may be; or three-year or five-year package coverage for the third-party component and a one-year OD deadline.

The introduction of mandatory long-term TP insurance coverage meant an increase in the cost of insurance for new cars and two-wheeled vehicles, something that automakers have sought to cite as a reason for the slowdown in sales.

Although IRDAI permits the issuance of independent coverages of OD and TP, insurance companies were asked to ensure that those seeking OD had a valid TP.

"Insurers shall ensure that OD coverage is offered only if a TP coverage of the engine already exists or is taken simultaneously." The name of the insurer, policy number, and the date of commencement and termination of the TP policy must be stated in the DO. policy document.

Senior Vice President of Raheja QBE UW Personal Lines Puneet Sahni welcomed the IRDAI decision and hoped the change would bode well for customers as this could lead to a reduction in OD premium rates. The coverage rates of third parties, however, would remain the same in insurers, as they are regulated and bound by the rate set by the IRDAI.

The company secretary and compliance director of Bajaj Allianz General Insurance, Onkar Kothari, said that the IRDAI circular provides much needed clarity in terms of the insurer's approach to the DO's policy of stand-alone engines, their pricing and duration. It's going to be an annual policy. It also made it mandatory for insurers to ensure that no vehicle is to be insured for OD coverage only and the insurer needs to mention the start date and end date of the TP policy and the name of its issuer while providing an independent OD policy.

It also provides clarity to customers who opted for package coverage. Now they have the option of renewing their OD part of an insurer of their own choosing instead of continuing with the part they had for TP.

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