IRDA issues draft guidelines on third-party motor insurance
20 Mar 2015
The Insurance Regulatory and Development Authority of India has proposed that no insurer can refuse to underwrite third-party motor insurance.
"The regulations of the Insurance Laws (Amendment) Ordinance, 2014) stipulate just the minimum obligation of the insurer in respect of motor third party insurance business," Irdai said in an exposure draft.
"Notwithstanding this, at no instance the insurer shall refuse to underwrite the 'liability only' motor policy covering motor third-party insurance risk coming to its office," the insurance regulator said.
This is a mandatory cover, along with the own damage cover, that a vehicle owner has to purchase. The third-party motor insurance cover is for any collateral damage to a third party, generally a human being, caused due to road accident.
The exposure draft said every insurer during a financial year should underwrite such minimum percentage of the 90 per cent of the overall third-party motor insurance business premium of the industry for the immediate preceding financial year.
"The minimum percentage so decided should be equal to the simple average of insurer's share in total gross premium of the industry and that in total motor insurance premium of the industry, both in the immediate preceding financial year," Irdai said.
Insurers are expected to submit their response on the exposure draft by 25 March.
