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If you are going to buy a new car or an old vehicle, then you may see a big change in the rules related to insurance. IRDAI has made such proposals, which can provide an option to buy motor insurance from a digital platform instead of a dealer. There are also preparations to reduce commission, increase transparency in insurance sales and reduce dealer pressure on customers. Know how the new proposals will affect your pocket and the way you buy insurance.
Some rules regarding motor insurance may change.
If you are about to buy a new car or any vehicle, then the latest offers from IRDAI can significantly change your insurance buying experience. The regulator wants that there should not be only one option at the dealership, but you should also get a clear opportunity to buy insurance through digital platforms like Bima Sugam. Also, efforts are being made to make prices more transparent and reduce the pressure on dealers by reducing the commission on third-party insurance. Statistics show that between FY23 and FY25, motor insurance premiums increased by only 34%, but commission increased by a whopping 259%.
The average commission in FY25 was around 24% (ranging from 13% to 50%). OEM brokers and MISPs captured about 30% of the market, collected premium of ₹29,000 crore and earned commission of about ₹7,050 crore. On new vehicles, OEMs got an average of 27% and MISPs got 38% commission, while on old vehicles MISPs got only 12%. The regulator has described new car third-party insurance as a ‘no-effort product’ and own-damage and comprehensive as low-effort products. These are just proposals, not final rules. Let us know how customers will benefit from this?
Digital purchase option will come
According to the new rules, motor insurance for both new and old vehicles should be available on platforms like Bima Sugam. You will have to clearly display this option at the dealership, which will also have a QR code, so that you can take the policy digitally sitting at home or on the spot. It will also be important for the dealer to tell you about this option. The fees of not-for-profit platforms cannot exceed 5% of the premium. This will reduce your need to depend on the dealer.
How will dealers be able to sell insurance now?
Dealers who fulfill the conditions of IDE will have to register as IDE. The rest will have to join as a PoSP of an IDE or an associate of an insurance company. No arrangement (such as performance-linked incentives) will operate against the interest of the policyholder. This is expected to reduce dealer pressure.
No effect on cashless repair
Even if you have not purchased insurance from the dealer, the dealer will not be able to refuse you cashless repair. Your mobile number will be shared with the PIR, which will match with the VAHAN system and send you a confirmation message. This will make the process more secure and trackable.
Third-party insurance may be cheaper
Commission on compulsory third-party insurance increased to 22% from 4.3% earlier. Now it is proposed to keep it much lower, due to which your total cost while buying a new vehicle can be reduced to some extent. Let us tell you that all these changes are currently in the consultation stage and the opinion of the stakeholders will be taken before final implementation.
About the Author
Ram Mohan Mishra is an active journalist in the automotive world of digital media and has been working continuously in the field of auto journalism since 2021. Presently he is handling the auto desk of News18 Hindi as Senior Sub-Editor.
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