Supreme Court has turned down the last-ditch attempt by the general insurers to extend the time-frame for implementing its order on issuing long-term motor policies.
After hearing all parties including the General Insurance Council, and the Road Safety Council in India, the court told the insurance industry to implement its earlier order from September 1. The GI Council had argued that the industry needed more time as a lot of ground work needs to be completed apart from the fact that the state governments and Regional Transport Offices all over the country should be in position to supervise the issuance of long-term policies at the time of registrations of all new vehicles.
The GI Council also pointed that the entire industry is now busy settling claims on account of Kerala floods.
Puneet Sahni, Head, Product Development, SBI General, said that there is a substantial back-end work that is required to be done prior to entering the market with a new set of offering. “SBIG had anticipated the same and has been working on this for a while now. We would be able to offer the new set of policies well in time. The pricing of the Own Damage policies have to be worked out at insurer’s end and the benefit of savings in cost shall be passed on to the customer.” The pricing for Third Party premiums, however, has been implemented by the IRDAI.
Sanjeev Mantri, Executive Director, ICICI Lombard General Insurance, said, “the introduction of mandatory long term policies for new vehicles will go a long way in addressing the problem of under-insurance of motor vehicles. Today, as is widely estimated, around 60 per cent of two- wheelers and 35-40 per cent of four-wheelers are being driven on Indian roads without any motor insurance cover. With the launch of mandatory long term motor policies covering new two-wheeler and four-wheelers, we are sure that motor insurance penetration levels will rise further in the coming years.”
Subrata Mondal, Executive Vice President (Underwriting), IFFCO Tokio General Insurance, said that the new regime will offer price stability and convenience as customers need not renew each year and they are insulated from the yearly hike in TP premiums. It will minimise the presence of non-insured vehicles to a large extent. One of the major disadvantages is that the upfront payment of premiums that may be unaffordable for some customers as almost 100 per cent of 4-wheelers are insured before they leave the dealerships.
