Will my business suffer because of multi-year car insurance policies?

car insurance

The motor insurance segment is quite popular simply because motor insurance policies are compulsory for driving vehicles on Indian roads. So, all your clients, who own a car or a two-wheeler, would buy a motor insurance policy from you securing their vehicles. You should, therefore, keep yourself updated with the changes happening in the motor insurance segment. One of the changes in recent times is the introduction of long-term car insurance plans. While, earlier, only two-wheeler insurance plans came with a term of two or three continuous years, now, the Insurance Regulatory and Development Authority of India (IRDAI) has introduced long-term car insurance plans too. Sounds familiar?

 

As proposed by the IRDAI and also approved by the Supreme Court of India, it is believed that all vehicles would have a mandatory long-term third party liability cover from coming September. Two-wheeler third-party plans would be offered for five years. Similarly, car insurance third party plans would be offered for two consecutive years. The Supreme Court has made the long-term cover for the third party plans compulsory. It is believed that insurance companies would offer comprehensive policies for long terms also. Both car and two-wheeler insurance plans would be changed as per the new rules announced by the court.

 

What the insurance companies do or how they design the policy is up to them. For you and your clients, the introduction of long-term car insurance plans is an added advantage. Here’s how –

 

How your customers would benefit

  1. The third party premium is revised by the IRDAI every year. Upon such revision, the third party premium increases or decreases upon policy renewal. With a long-term policy, your customers would be assured of a fixed third-party premium over the long-term duration. Even if IRDAI increases the rates, there would be no effect of the increase on the existing long-term car insurance plan’s premium.
  2. Though customers would have to shell out combined premiums of two years at once, the overall premium cost of insuring the car over the long term would turn out to be cheaper as is found in the case of long-term two wheeler insurance plans.
  3. There would be no hassles of annual renewals of car insurance plans. This would also help your customers avoid a lapse of their policy and subsequent renewals at higher premiums.
  4. The Insured Declared Value (IDV) of the car might remain fixed over the term of the plan. This would prevent lowering of the car’s value every year.
  5. There might be premium discounts offered by insurance companies when clients choose long term car insurance plans.

 

What can you benefit?

 

Your customers would surely benefit from the introduction of long-term car insurance plans and so would you. Here’s what this change has in store for you –

 

  1. The hassles of annual renewals would not only benefit your clients but you too. You would not have to get your clients’ policies renewed every year and can instead focus on selling more policies and increase your income.
  2. As the client would pay a higher premium upfront, your commission would be higher increasing your income.
  3. As the car insurance policies become better with long-term benefits, you can get more clients.

 

So, insurance companies are redefining their motor insurance products to obey the Supreme Court’s verdict. Meanwhile, you can inform your clients of the new changes and get them interested. When the changes are implemented, you would have your set of clients ready to invest in long-term car insurance plans. You should, therefore, be prepared with the changes which might come in. After all, well begun is half done, isn’t it?

Read more about IRDAI’s new motor insurance rules and their effect on your customer’s premium outgoes

Read more about Long term motor policies: what you should advice your clients

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