IRDAI Directs Insurers to Offer 3rd Party Motor Cover Online
In a significant move, the Insurance Regulatory and Development Authority of India (IRDAI) has issued a circular instructing non-life insurance companies to make third-party motor insurance cover available online. This directive comes as part of the Supreme Court Committee on Road Safety’s efforts to ensure that all vehicles on the road have mandatory third-party insurance.
The Importance of Third-Party Motor Insurance
Third-party motor insurance is a crucial component of road safety and financial protection. It provides coverage for damages or injuries caused to a third party in an accident involving the insured vehicle. This insurance is mandatory under the Motor Vehicles Act, 1988, and failing to have valid third-party insurance can result in penalties and legal consequences.
The Need for Online Availability
Until now, insurance companies primarily offered comprehensive motor insurance policies online, while third-party insurance was predominantly accessible through offline channels. This created inconvenience for vehicle owners, especially those with older cars, as they had to visit insurance offices or agents to obtain third-party coverage. Recognizing this issue, the IRDAI has directed non-life insurers to ensure easy availability of third-party motor insurance, including online options.
Advantages of Online Third-Party Motor Insurance
The availability of third-party motor insurance online offers several advantages for both insurers and policyholders. Here are some key benefits:
- Convenience: Vehicle owners can now purchase or renew third-party motor insurance policies from the comfort of their homes or offices, eliminating the need for physical visits to insurance offices or agents.
- Quick and Easy Process: Online platforms provide a streamlined and user-friendly process for obtaining insurance coverage, reducing paperwork and minimizing the time required for policy issuance.
- Comparison and Selection: Online platforms enable policyholders to compare multiple insurance plans, their features, and premiums, empowering them to make informed decisions based on their specific requirements.
- Cost-Effectiveness: Online distribution eliminates intermediaries, resulting in cost savings for insurance companies. This can translate into competitive premiums for policyholders.
- Instant Policy Issuance: With online motor insurance, policyholders can receive their insurance policies instantly via email or download them directly from the insurer’s website.
IRDAI’s Circular and its Impact
The IRDAI’s circular makes it clear that insurance companies must not deny requests for third-party motor insurance coverage. Ensuring the availability of online options is crucial for compliance with the Supreme Court Committee’s directive on road safety. State governments are now required to conduct checks on vehicles to ensure they have valid third-party insurance. Failure to produce the necessary insurance certificate may result in the vehicle’s detention.
Challenges and Solutions
Insurance companies face certain challenges when dealing with proposals for third-party motor insurance, particularly when there is a break in insurance coverage. To mitigate these challenges, insurers are exploring solutions such as:
- Streamlined Proposal Process: Insurance companies are working towards simplifying and expediting the proposal process, reducing the need for inspections and enabling quick policy issuance.
- Improving Accuracy: Insurers are exploring methods to ensure accuracy in recording the time of accidents, as this information is crucial for processing claims and determining policy coverage.
Road Safety and Insurance
Road accidents in India claim the lives of approximately 17 people every hour. Third-party motor insurance provides the only compensation available to victims of these accidents. In cases where the vehicle owner does not have insurance, they become personally liable for any damages or injuries caused. However, enforcing claims against individuals can be challenging, leading to inadequate compensation for victims. Insurance companies contribute to a fund that provides some compensation in such cases.
Conclusion
The IRDAI’s directive to offer third-party motor insurance online is a significant step towards enhancing road safety and ensuring compliance with the law. This move benefits both vehicle owners and insurance companies by providing convenience, cost-effectiveness, and streamlined processes. With the availability of online options, obtaining third-party motor insurance has become easier and more accessible for all vehicle owners. It is crucial for vehicle owners to comply with the law and protect themselves and others on the road by having valid third-party motor insurance coverage.
