Car-owners can select their insurance cover from the dealer itself as the insurance regulator has allowed all non-life insurers to sell motor cover through auto dealer networks. The move will benefit customers because of the differential pricing and multiple choice. At present, a customer has to buy an auto insurance from only that insurer with whom the dealer has a tie-up. As a result, customers do not have any choice on the insurance company at the time of purchasing the vehicle.

Eligibility of MISP

The guidelines issued by Insurance Regulatory and Development Authority of India underlines that Motor Insurance Service Provider (MISP) will be sponsored by either an insurance company or an insurance intermediary. The sponsoring entity will be responsible for all acts of omission and commission of the MISP. The designated person distributing motor insurance policies will have to undergo training and examination of Point of Sales.

The MISP will have to maintain records for a period of at least seven years from the date of issuance of a policy. A periodic review of the controls, procedures and safeguards put in place by the MISP will be carried out at least once a year by the sponsoring entity.

The new norms came after Irdai set up a committee to study motor dealer payouts. The committee submitted its report in May last year. Based on the report and interactions with insurers and other stakeholders, Irdai has now framed the new norms.

Code of MISP

The regulator has mandated that every MISP will have to offer a choice of motor insurance policies of different insurers and inform the customer of the premium rates of different insurers. The MISP will have to issue a receipt of the insurer after receiving the premium and the details of the customers with the insurer. The MISP will not deny the customer his rights and options to seek motor insurance policy or renewal of motor insurance policy from any insurer.

The MISP will have to ensure that only those features of the motor insurance policies which are approved by the insurance regulator under product filing procedure are shared with policyholders. Any information which is detrimental to the interests of the policyholder or is misleading and is not approved by the regulator will never be used by the MISP.

The MISP will facilitate the creation of e-insurance account of the customer and will also be responsible for compliance of the directions issued by the insurance regulator. The pricing of every motor insurance policy will be decided by the insurer and it will be the responsibility of the insurer to ensure that motor insurance policy pricing is in compliance with that approved by insurance regulator.

The regulator has also allowed higher commission for the auto dealers which would be paid by the insurer. For own damage cover, these dealers will be paid 19.5% for cars, and 22.5% for two-wheeler covers.

Cashless service

The MISP will cover policyholders’ insurance claim, cashless service and repairs. Moreover, it cannot discriminate between policyholders who have bought motor insurance policies through it and others.

The premium to be charged by the insurers will be based on each insurer’s own risk factors, its own rating parameters and its own claim experience under product filing procedure. The appointment of surveyors and loss assessors for claims assessment will be as per extent norms.

The insurer will directly intimate the policyholder the initial estimate of the loss and the final amount for which the claim was settled, preferably through electronic mode.

In all existing arrangements, automobile dealers holding any insurance intermediary licence cannot distribute and service motor insurance policies. They will have to first surrender the existing license or certificate of registration and become a MISP in order to distribute and service motor insurance policies. In case the regulator feels that the operations of the MISP are not in the interests of the insurance market or policyholders, it can suspend or cancel the appointment of MISP.