Premiums to shoot up
The new commission structure will come into effect from April 2017
If you were worrying over the rise in the price of automobiles, brace up for an increase in the cost of motor insurance next. The commissions on motor insurance have gone up by 50 per cent to 15 per cent. Many new vehicle buyers may not feel the pinch much because when buying a new vehicle, the dealer sells a comprehensive motor insurance and absolves most of the first year premium himself. It has been generally found that at the time of renewal, distributors are unable to ensure that the car owner renews the policy with them.
It is with this view that an increase in commission has been suggested to encourage distributors to ensure that policyholders renew policies with them. In case of a comprehensive motor insurance cover, the policy covers for damage to life or property of a third person by the insured vehicle, own damage cover that insures your vehicles against theft or damage and it may also include personal accident insurance for owner and driver. The new commission structure will come into effect from April 2017, which could result in premiums that you pay to shoot up.
As a liability only cover is mandatory to ply your vehicle on Indian roads, the commissions on liability only cover is 2.5 per cent; unlike the past when there was no commission on just the third party liability cover. Further, insurers are planning to pay incentives to agents and distributors so that they can not only ensure renewal of the policy, but also work towards it now that they have the draw of incentives to ensure the policy is renewed with them and comprehensively.
Typically the regulator sets the tariff for the liability cover every year, this time around; the new rates may factor in the commissions before they are announced. So, brace up to pay more on your motor insurance this year.