Motor Insurance: Recently, the Supreme Court of India issued a stern remark regarding motor vehicle insurance, stating that if a vehicle is not insured, petrol or diesel should not be supplied. The court ordered the Insurance Regulatory and Development Authority (IRDAI) to develop a pilot project for this purpose.
Now, another major change is underway regarding motor vehicle insurance. When purchasing a new car, showroom owners or dealers will no longer be able to force you to purchase insurance from them. When purchasing a new car, you will have the option to choose a policy from a digital platform like Bima Sugam at the showroom. This will prevent dealers from forcing you to purchase expensive insurance. You will have multiple options to negotiate and choose a cheaper insurance policy.
Motor Vehicle Insurance to Change
IRDAI is preparing for a major change in the insurance sector. Under the proposed changes, customers will be relieved from mis-selling and high distribution costs, and you will have multiple options for purchasing insurance. You will also have the option of using digital platforms. In the new draft, IRDAI will require dealers to install a QR code on a digital insurance platform, such as Bima Sugam, in their showrooms, allowing customers to choose their preferred insurance policy. It will be up to customers to choose between purchasing insurance directly from the showroom or scanning the QR code.
The insurance regulator is recommending a reduction in commissions on mandatory third-party motor insurance. While this is currently a proposal, if implemented, you will no longer be obligated to purchase insurance from dealers when purchasing a new car. You can purchase the policy digitally and negotiate a cheaper policy. IRDAI recommends that both new and old insurance be offered through a digital platform, i.e., Market Infrastructure Institution. Customers can purchase insurance directly on the digital platform if they wish.
Commissions should also be curbed; third-party insurance commissions should be reduced.
IRDAI has also proposed reducing commissions on mandatory third-party motor insurance. It was 4.3% in 2023, rising to 22% in 2025.
According to the insurance regulator, motor insurance premiums increased by 34% between FY23 and FY25, and insurance commissions increased by 259%. The regulator expressed concern over this rising commission. The insurance regulator argues that lower commissions will increase demand for motor insurance. To reduce these high commissions, the insurance regulator is preparing to lower the cap on commissions for mandatory third-party and comprehensive insurance policies.
The regulator has also proposed that customers be offered cashless repairs even if they purchase insurance from a location other than the dealer. Dealers cannot refuse cashless services to customers. IRDAI is working to make motor insurance simple and affordable. If these proposals are implemented, car insurance could become cheaper.
