The Insurance Regulatory and Development Authority of India (IRDAI) has issued an Exposure Draft on Long-Term Motor Product. The Draft covers both Motor Third Party Insurance and Own Damage Insurance. It was issued on 7th December, 2022.
The Exposure Drafts proposes the following:
All General Insurers will be permitted to offer long-term motor insurance policies.
There will be a ‘Board-approved policy’ set up by the Insurer. This policy must contain acts relating to operational matters, accounting, and disclosures for addressing the issue of policy cancellation including claw-back of commission.
Pricing of long-term policies is based on sound actuarial principles considering all the relevant aspects of rating. The pricing of add-ons and optional covers may likewise consider the cost efficiencies of policy administration.
The depreciation rate to apply on the IDV agreed shall not exceed 10% per annum during the policy period.
The premium for the entire term of the policy coverage shall be collected at the time of the sale of insurance.
The standard conditions relating to cancellation/refund of premium are as follows:
- Every long-term Motor Own Damage policy shall have a 30-day free-look period. This period will begin on the date of inception of the policy. Thus the policyholder will be able to review the terms and conditions of the policy. The policyholder can also avail a refund of the premium on a pro-rata basis in the event of exercising the free-look cancellation.
- The policy-holder can also cancel the long-term motor Own Damage policy during the tenure of the policy. Cancellation may be effected either by a policyholder or by the insurer. This must be done through a notice of cancellation.
The detailed conditions and terms of cancellation of the policy must be specified in the policy contract, the prospectus, and on the insurer’s website.
Cancellation of long-term Motor Third Party Liability policy would be as per extant guidelines.
All stakeholders can forward their comments on the exposure draft by 22nd December, 2022, in the attached format at the e-mail id email@example.com.