Page 50 - The Insurance Times June 2020

insurance companies shall also comply with various Party Insurance and Own Damage insurance for
provisions of HIV and AIDS Prevention and Control Act, three years or five years as the case may be,
2017 and Mental healthcare Act, 2017. (ii) A bundled cover with a three-year or five-year term
2. Notwithstanding the above provisions, it is considered (as applicable) for the third party component and
essential that the targeted population of every insurer a one-year term for the Own Damage.
shall have complete information on the philosophy that 3. In addition to the above covers and effective 1st
insurers adopt while complying with the above referred September, 2019, the insurers shall make available
provisions. stand-alone annual Own Damage covers (including
3. In furtherance to above, all Insurers are instructed to standalone OD cover for fire and/or theft [ GR 45 A and
publish on their respective websites the underwriting 45 B] if opted for by the policyholder) for Cars and Two-
philosophy and approach with regard to offering wheelers, both new and old in terms of Circular Ref:
insurance coverage to the following category of IRDAI/NL/MOTOD/095/06/2019 dated 21st June, 2019.
population: 4. The Authority has reviewed the various options of long
a. Persons with Disabilities ( PWD) term and annual motor insurance covers now being
b. Persons affected with HIV /AIDS offered to the prospects/policyholders pertaining to
Own Damage. After a careful examination of the
c. Persons affected with Mental Illness diseases.
performance of Long Term Package covers and the
4. All Insurers (Life, General and Health Insurers) are here following concerns relating to its implementation since
by directed to comply with the aforesaid instruction by its introduction in September, 2018, the Authority has
01st October, 2020. decided to withdraw Long Term Package covers offered
5. This has the approval of the competent authority. for three years or five years for new cars and new two-
wheelers respectively with effect from 1st Aug, 2020.
(D V S Ramesh) Y Actuarial pricing has been a challenge for insurers
General Manager (H) for long term Own Damage cover.
Y Distribution of package policies has its challenges
Withdrawal of Long Term Package cover due to affordability factors for a large section of
owners of vehicles.
offering both Motor Third Party
Y The possibility of forced selling due to financial
Insurance and Own Damage Insurance interest/ being linked to loans is high.
for three years or five years Y In case of deficiency in services, policyholders would

be saddled with a longterm product with no
IRDAUNUCIR/MOT/143/06/2020
flexibility to change options.
Dated: 8t June, 2020
Y The No Claim Bonus (NCB) structure is not uniform
1. Pursuant to the decision of the Supreme Court in the among insurers and this could lead to confusion and
matter of WP No.295/2012 of Shri.S. Rajaseekaran vs dissatisfaction amongst the policyholders.
Union of India and Ors, the Authority issued Circular Ref: 5. Except for withdrawal of the long-term package
IRDAUNL/CIR/MOT/137/08/2018 dated 28th August, products (and the add-ons thereon) with effect from 1st
2018, directing that all general insurers (except the August, 2020, all other extant provisions shall continue
stand-alone health insurers and the specialized insurers) mutatis mutandis.
shall offer only three-year Motor Third Party insurance 6. No Claim Bonus in respect of long-term package policies
policies for new cars and five year motor third party already issued will accrue only when the policy term has
insurance policies for new two-wheelers with effect been completed.
from 1st September, 2018.
Please acknowledge this circular and confirm having noted
2. With the introduction of the aforesaid long term covers, its contents.
the general insurers were advised to provide insureds
the following two options to choose from: (T. L. Alamelu)
(i) Long Term Package cover offering both Motor Third Member (Non-Life)

50 The Insurance Times, June 2020