Soon, two-wheeler owners may be able to buy longterm insurance policies, which could do away with the hassle of annual renewals. Long-term policies are expected to reduce instances of dropouts, which is rampant among two-wheelers since agents do not find it lucrative enough to pursue renewals.
The General Insurance Council — an association of non-life companies set up under the aegis of the Insurance Regulatory and Development Authority — has initiated a move to push long-term contracts that will be valid for 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 council level, insurance companies have discussed the proposal with the finance ministry as one of the measures to curb losses under third-party insurance . Although owning a third-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 third-party liability insurance is a tariff product, insurance companies cannot change the terms and conditions on their own,” said Sanjay Datta, head, underwriting and claims, at ICICIBSE 1.16 % Lombard General Insurance.
The third-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 the country. If an uninsured vehicle is involved in an accident, the owner is liable to pay compensation to the victim.
The cost of third-party cover is a few hundred rupees and 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 and 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 and means of making distribution easier. We have introduced touch points at petrol pumps just like the centres that issue PUC certificates,” said Datta. However, in rural areas where two-wheeler sales are picking up in a big way, reaching out to vehicle owners will be a challenge. In many cities where awareness is 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 the country to verify whether a vehicle is insured by merely sending an SMS to a central database.