New Delhi: In what could bring cheer to both automakers and car buyers alike, the Insurance Regulatory and Development Authority of India (IRDAI) on Tuesday said it is withdrawing the long-term motor insurance policy circular.
The circular directed general insurance companies to provide third-party and own-damage long term package covers for three and five years to new two and four-wheelers.
The regulator said the circular had created problems for insurers and made it affordable for buyers. The IRDAI in a circular said it decided to withdraw the long-term package policy and add on thereon from August 1 onwards while other provisions shall continue.
The move was withdrawn after analysing the performance of the long term package covers and following concerns around its implementation after it was introduced.
Industry analysts say the move will help spur demand as on-road prices of both two-wheelers and four-wheelers will come down.
Following Supreme Court orders, the insurance watchdog had asked general insurance providers to provide three-year third-party policies in case of new cars and five-year third-party policies for new two-wheelers with effect from September 1, 2018.
IRDAI had also directed the insurance companies to give two options to policyholders: first being a long-term package covering both third-party and own-damage insurance for three-year and five-year. The second being a bundled cover offering three-year and five-year third-party covers and one-year own-damage insurance.
After the circular being withdrawn, only bundled cover offering third-party cover for three years and five years and the own-damage insurance policy for one year.
“It is a good decision as it gives customer choice.