2 hrs ago
IRDAI Proposes Digital Motor Insurance Options for New Cars
India’s insurance regulator wants to change how people buy insurance for cars.
If the plan is approved, someone buying a new car must be shown a clear digital way to buy insurance.
The option could be reached through a QR code and platforms such as Bima Sugam.
Car dealers would have to follow new rules if they sell insurance.
Some dealers might need to register as brokers, while others would work with an insurer or another insurance distributor.
The regulator is also concerned that insurance commissions have grown much faster than premiums.
It has proposed lower commissions for some easy-to-sell and mandatory policies.
Customers should still be able to receive cashless repairs even if they bought their policy somewhere else.
These are proposals from a consultation paper, not final rules.
IRDAI has proposed requiring dealers to prominently offer new-car buyers a digital motor-insurance purchasing option through platforms such as Bima Sugam.
The regulator said motor-insurance premiums rose about 34% between FY23 and FY25, while commissions increased about 259%.
OEM brokers and Motor Insurance Service Providers accounted for about 30% of the motor-insurance market and received nearly ₹7,050 crore in FY25 commissions.
Dealers selling insurance would need to register as Insurance Distribution Entities, join an IDE as Points of Sales Persons, or associate with a single insurer.
Dealers would not be allowed to deny cashless repairs solely because a customer bought insurance elsewhere, under the proposed rules.
- Who
- The Insurance Regulatory and Development Authority of India (IRDAI), motor dealers, insurers, OEM brokers, and Motor Insurance Service Providers are involved.
- What
- IRDAI has proposed reforms covering digital motor-insurance sales, dealer registrations, commissions, and cashless repair access.
- Where
- The proposed changes apply to motor-insurance distribution in India, including purchases through platforms such as Bima Sugam.
- When
- The proposals concern FY25 data and future rules; the articles do not specify a date for implementation.
- Why
- IRDAI says the reforms would address motor-insurance distribution economics, commission levels, distribution structures, and customer choice.
Key facts
- Premium growth
- Motor-insurance premiums grew about 34% between FY23 and FY25.
- Commission growth
- Motor-insurance commissions increased about 259% between FY23 and FY25.
- FY25 dealer-channel premiums
- OEM brokers and Motor Insurance Service Providers generated about ₹29,000 crore in premiums.
- FY25 commissions
- Those distributors received nearly ₹7,050 crore in commissions.
- Average commission
- The average motor-insurance commission was about 24% in FY25, with reported rates ranging from 13% to 50%.
- Digital purchase option
- Dealers would have to display an option, including a QR code, to buy insurance through a Market Infrastructure Institution platform.
- Platform fee proposal
- Not-for-profit platforms created by all or a group of insurers would have a proposed fee cap of 5% of premium.
Sources
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