IRDA asks companies to issue long-term third party insurance for cars, two-wheelers

The Insurance Regulatory and Development Authority (IRDA) has issued guidelines for longer tenure motor Third Party (TP) policy.

Shaping the Supreme Court (SC) order which had spoken about insuring availability of longer tenure motor third party policies from September 1, the insurance regulator on Tuesday came out with guidelines as far as this new product is concerned.

Essentially the IRDA is saying that the insurers will have to provide the mandatory motor third party policy for cars for a minimum tenure of three years and for two-wheelers with a minimum tenure of five years. Current tenure stands at one year for each of these vehicle segments.

Specifies guidelines for longer tenure motor third party policy

Lays down registration process of longer tenure motor third party pdts

Approval to be given immediately for longer term pdts submitted before Aug 31

Insurers to offer motor third party policy for minimum period of 5-yrs from Sep 1

Insurers to offer motor third party policy for minimum period of 3-yrs from Sep 1

- Insurers shall also provide longer tenure comprehensive motor policy from Sep 1

- Premium for long tenure policy to be collected for entire term during sale of policy

- Insurers cannot account for entire 5-yr, 3 yr premium in total income/gross premium

- Insurers to account for 1-year motor third party premium in total income/gross premium

- Balance premium to be shown as advance premium/premium deposit

- Insurers can use entire 5 year or 3 year premium for making their investments

- Insurers shall advertise about longer tenure motor third party products

- Commission for insurance brokers to be notified separately