Bike insurance built for a win-win to consumer & insurer
In India, two-wheelers have become the most preferred mode of transportation especially during congested traffic hours, rising petroleum and diesel rates giving optimum mileage and for many households where more and more people have started adopting the nuclear family options. Mopeds and Bikes are very common across Indian towns and cities, providing mobility to lakhs of people in rural as well urban areas. Indian two wheeler industry is one of the largest in the world as far as the volume of production and sales are concerned. India has registered an overall growth rate of 9.5 percent between 2006 and 2014. The growth in Indian Automobile Industry owed the most to a steep upsurge witnessed in the two wheeler segment in 2014. The volume growth recorded in the 2014-15 fiscal year stood at a commendable 14.8 percent on a year-on-year basis. 'Make in India' is a campaign run by Government of India to attract more foreign investment into Indian two wheeler segment creating further growth opportunities in the coming years.
Keeping in mind the huge growth opportunities and high FDI flow the government has focused on boosting the two wheeler insurance segment as well. Recently, India’s first three year comprehensive cover for scooters and motorcycles was launched by government. The comprehensive cover is 30 percent cheaper than buying annual policies and comes with lucrative offers for the buyers. In addition, if there is a bonus entitlement due to no claim in the preceding year, the discount can go up to 50%. This new scheme will surely help in tackling the problem of uninsured two wheelers plying on Indian roads.
According to IRDAI sources, the total premium charged for three year third party two wheeler insurance will be three times the annual premium as prescribed by the regulator from time to time. The premium will not be revised during the period of the policy in any circumstances and will have to be paid in one installment, subject to compliance of Section 64 VB of the Insurance Act, 1938. Insurers will be unable to cancel the standalone third party cover in any circumstances, except in case of total loss. IRDAI has also mandated that the premiums for the full unexpired years will have to be refunded to the customer. The insurers cannot change the terms and conditions after the policy is underwritten.
From insurer’s point of view, it is as such that insurers who want to offer the three year cover will have to submit a letter of intent to regulatory body and will be treated as submission under file-and-use guidelines of the regulator. Also, insurers are encouraged to file three-year term comprehensive policy for two-wheelers as per file-and-use guidelines,” says the IRDAI note.
Motor law in India makes third party insurance cover a mandate for the vehicle owners. The reason stands in the benefits of the vehicle owner itself as it covers the liability of a third party in case of an accident. For insurers, the three year tenure will help reduce the cost of issuing policies, administering them and follow ups for renewals. This could also lead to lower premiums as insurers could pass on the savings to customers. Thus, the decision of medium term bike insurance policy will actually help to boost the overall business thereby creating a win-win situation for both consumers and insurers.
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