Page 7 - The Insurance Times May 2021

monsoon session or winter session by non-life insurers grew by 5.2% to Rs. take effect in some time, we are ready
depending on various approvals. 99 trillion ($26.4 billion) for the to help the customers who intend to
financial year ended March 31, 2021 discard their vehicles."
Scrappage policy may (FY21). The non-life sector comprises The agreement with MMRPL will
25 general insurers, 5 standalone
lower car insurance enable customers to get a transparent
health insurers, and 2 specialised
premium public-sector insurers. and hassle-free deal under one roof.
Any customer intending to purchase a
Older vehicles are not only more According to a report, FY21 was a new Mahindra vehicle by scrapping/
hazardous but also carry a greater risk 'peculiar' year for general insurers exchanging the old vehicle which is
of breakdowns and accidents. They also because the motor branch which more than 15 years old can do so at
lead to more pollution. makes up the biggest class of business any of its dealerships. These services
The scrappage policy aims at taking old in general insurers' portfolios, shrank in would provide utmost convenience to
vehicles off the roads. Vehicles beyond the initial months of the COVID-19 the customer without the need to look
an age are compulsorily to be scrapped pandemic due to lockdown restrictions. for a vehicle scrapping agency/dealer.
under the statute. Such policies The motor branch has since slowly
currently exist in some states in recovered as the economy opened up. Under the proposed policy, a scrapped
differing forms. The national-level On the other hand, health insurance vehicle will be offered a monetary
policy that is now being envisaged value close to 4-6% of the showroom
business saw a huge uptick as demand value. There could even be up to a 5%
contemplates a 15-year life span for
for health plans, especially in the retail discount on the purchase of a new
vehicles.
segment, surged since the onset of the vehicle if a scrap certificate is
R.K.T. Krishnan, Country Head - Motor COVID-19 pandemic. produced.
Claims, Royal Sundaram General
Crop insurance, on the other hand,
Insurance, stated that the Government
remains a challenge for the industry. United India Insurance can
of India has been considering a policy
to scrap vehicles that have reached be sold to private firms
their end of life (typically 15 years for Mahindra & Mahindra to
According to the latest reports the
a commercial vehicle and 20 years for offer end-to-end solution government is considering United India
a private vehicle) since 2016 and the
policy draft for scrapping facilities was for vehicle scrapping Insurance as one of the state-run
notified on 15 March. Mahindra & Mahindra Ltd. has recently insurers for privatization. Apart from
said that it has inked an initial pact this, the other public sector insurers
The impact of vehicle scrappage on
with its automotive and steel recycling could also be taken up for privatization.
insurance will be known as the The names mainly include National
implementation of the policy evolves JV MMRPL to offer its customers an
end-to-end solution for vehicle Insurance or Oriental Insurance, as per
into action. Insurers will prefer safer
scrapping. The move comes in the the information.
vehicles to insure and this will have an
impact on third-party claims. Any wake of the government last month According to the sources, "United
proposing a policy for vehicle India Insurance is one of the top
third-party premium reduction on this
scrapping, under which vehicles that choices for privatization. Discussions
score will have to be seen, as a third-
fail fitness tests or are unable to renew are on, with the other options being
party premium is fixed after
considering the industry experience. registration after 15-20 years of use will National Insurance or Oriental
be deregistered. Insurance."
Non-life sector reports Veejay Ram Nakra, CEO, Automotive Since this process of privatization will
Division, Mahindra & Mahindra Ltd., take some time, including legislative
5.2% growth in gross
said, "Our agreement with MMRPL is amendments, any move towards
premiums in FY21 a step towards a one-stop solution for privatization and divestment of public
According to preliminary data from the customers who wish to scrap their old sector insurers is likely to happen in the
IRDAI, gross premiums underwritten vehicle. While the scrappage policy will second half of the fiscal year.

The Insurance Times, May 2021 7