The Insurance Regulatory and Development Authority of India (IRDAI) has indicated that it would disband the practice of annual fixing of premium for third party (TP) insurance for motor vehicles from 2020-21. This would allow for insurance companies to quote their own premiums, which may bring it down because of stiff competition, according to the Economic Times.
Currently, the insurance regulator announces the fixed premium for TP insurance cover, which is mandatory for every vehicle that plies on the road. The transporters have been demanding that the regulator fix the cap for premium and allow insurance companies to offer discount so that policy-buyers have greater choice.
Since there is no fixed premium for “own damage”, insurance companies offer a huge discount. Insurance companies collected about Rs50,000 crore premium for motor vehicle insurance in 2016-17, according to Insurance Information Bureau of India (IIB).
Insurance companies have been more keen to sell comprehensive insurance policies, which include both TP and own damage (OD).