In India very soon, 2 wheeler owners may be able to buy long term insurance policies, which could do away with the hassle of annual renewals.
One time or Long-term policies are expected to reduce instances of dropouts, which is rampant among 2 wheelers since agents do not find it lucrative enough to pursue renewals.
Long Term Contracts..!
The GIC (General Insurance Council) an association of non - life companies set up under the aegis of the IRDA (Insurance Regulatory and Development Authority0 has initiated a move to push long term contracts that will be valid for about 10 years or so. The idea is to replicate the concept of road tax where annual payments were replaced by a one time levy many years ago.
Besides taking up the issue at the GIC level, insurance companies have discussed the proposal with the finance ministry as one of the measures to curb losses under 3rd party insurance .
Statutory Requirement for Vehicle owners.!
Mr. Sanjay Datta, Head, Underwriting & claims, ICICI Lombard General Insurance said, ''Although owning a 3rd party liability insurance, the cover that compensates accident victims is a statutory requirement for vehicle owners, industry officials estimate that half of two-wheelers are without the cover. Since 3rd party liability insurance is a tariff product, insurance companies cannot change the terms and conditions on their own".
The 3rd party cover is required by law so that in case of an accident, the victim receives compensation. These payouts are awarded by Motor Accident Claims Tribunals across India. If an uninsured vehicle is involved in an accident, the owner is liable to pay compensation to the victim.
The cost of 3rd party cover (premium) is very low that is only few hundred rupees & since commissions are a small percentage of the premium, insurance agents do not find it lucrative enough to chase renewals .
Insurance companies have been sending out text reminders & offering facilities to renew policies online. However, for the section of the population not familiar with online payments, renewal continues to be a challenge.
"We have been looking at ways & means of making distribution easier. We have introduced touch points at petrol pumps just like the centres that issue PUC certificates"
However, in rural areas where 2 wheeler sales are picking up in a big way, reaching out to vehicle owners will be a challenge.
Very Low Awareness..!
In many towns where awareness is very low, insurers have detected agents selling fake certificates and pocketing the premium.
Earlier, the insurance industry was pursuing an initiative of creating a centralized database of all insured vehicles and their registration numbers. The idea was to make it possible for traffic police across India to verify whether a vehicle is insured by merely sending an SMS to a central database.
Src: TOI
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