The way you buy motor insurance could be in for a major change if the proposals by The Insurance Regulatory Authority of India (IRDAI) come into force. The idea is to make the entire process simpler for the consumer using a more seamless digital medium while reducing commissions on insurance at the same time. This could result in lower premiums in times to come and also give the consumer more choice while selecting an insurance provider. Here's a look at some key proposals.
Buy Insurance From Where You Want
Under the new proposals while purchasing a new vehicle the customer will be given the option of taking insurance through a digital medium like Bima Sugam and not just rely on the dealer for it. The dealer will have to give the option to customer (likely via a QR code) so that the he can make an informed choice while buying the policy for the vehicle. The proposed platform fee has been kept at 5% of the premium amount which will directly result on the overall premium of the vehicle going down.
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Seamless Cashless Repairs
The dealers will also not be able to deny cashless repairs to consumers if the policy is not purchased from them. This has been a major bone of contention between the buyers and service centers for a long time with buyers reporting hostile behaviour if the insurance policy was bought separately. Under the new guidelines it will not matter where the policy has been purchased from and the dealer will have to facilitate a cashless claim filed by the user.
Dealer Commissions To Go Down
The new proposals also aim to reduce dealer commissions more so for third party policies. According to reports, commission on insurance has gone up significantly over the last few years across all kinds of policies. In certain cases dealer margins went upto as high as 50% and even the average number stood at around 25% in the previous financial year making it a significant chunk of the total amount the buyer has to pay while selecting a policy. This can come down as low as 5%.
Future of Dealers As Insurance Sellers?
IRDAI has also proposed that dealers and insurance provides will be brought under a more organised framework. They will have to register as an insurance distribution entity (IDE) is they wish to sell insurance policies to the buyers. The other option will be to tie up with an IDE as an associate in order to keep selling policies. This will insure a more streamlined process with a larger digital presence for the benefit of the consumer.
These proposals are still at a consultation stage and could still take some time to come into effect if formulated. The idea is to make a complex process a lot more simpler which helps the consumer make an informed and correct choice. It remains to be seen how insurance providers and dealers will react to these proposals as they stand to lose revenues but overall it could also result in a larger consumer base in the country.
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