In the last few months, there have been streaks of new regulations announced by the regulator on the motor insurance side, which will eventually benefit the policyholders.
The Insurance Regulatory and Development Authority of India (Irdai) recently unbundled the compulsory personal accident cover (CPA) and allowed the issuance of standalone policies. According to industry experts, this move will bring in relief to the policyholders who already have a CPA cover as they will have to shell out less from January 1, 2019.
A motor insurance policy has three components, which are a third-party liability (TP, which covers damage to others), own damage (OD, which covers damage to owner’s vehicle), and personal accident (CPA) cover. Third-party and CPA comprise the mandatory part of the motor cover while the OD cover is optional. In the last few months, there have been streaks of new regulations announced by the regulator on the motor insurance side, which will eventually benefit the policyholders.
Firstly, the regulator asked insurers to issue long-term motor policies for both two-wheelers and car insurance and later increased to CPA to Rs 15 lakh. However, going forward, it is to be seen how the insurers implement this new move by the regulator.
Rakesh Goyal, Director at Probus Insurance, says, “This is a positive move from the policyholder point of view as they will have to pay lower premiums if they have existing CPA. However, it will become a problem for the insurance companies to verify whether policyholder already has a CPA or not.” He further adds, “What steps will be taken by the insurer and regulators if policyholders don’t have a CPA and claims arises. Whether they will reject the claims or pay the money?”
If a policyholder has more than one vehicle and has CPA cover from one insurance company and motor insurance from another insurer, how will the claims take place in case of an accident? Industry experts believe, there is a need for some clarity on this issue.