- IRDAI withdraws long term insurance packages for own damage
- The move will come into effect from 1 August
The Insurance Regulatory and Development Authority of India (IRDAI) has withdrawn long term insurance package covers with effect from 1 August 2020. In September 2018, the Supreme Court had issued a circular directing all insurance companies to offer only three-year third party insurance for four wheelers.
According to the regulatory body, the step to withdraw long term insurance packages was taken due to various reasons such as the absence of a uniformity in the No Claim Bonus (NCB), no flexibility to change options in case of deficiency of services and challenges of distribution of package policies due to affordability factors, etc.
While the long term policies for own damage has been withdrawn, the same will continue to be offered for three years and five years, apart from the one year timeline for third-party policies. The move is expected to see a reduction in the on-road cost of a vehicle, which could improve the sales numbers that have been impacted due to the COVID-19 situation.
