New motor vehicles law boosts insurance sales

Heavy penalties set out in the new Motor Vehicles Act are believed to have led to an increase in sales of motor insurance policies. The new Act, which came into effect on 1 September, imposed higher penalties for various driving violations.

For example, if a vehicle is on the road without insurance, then a fine of INR2,000 ($27.80) and imprisonment of up to three months can be imposed for the first offence. For subsequent offences, a fine of INR4,000 and imprisonment up to three months can be imposed. Vehicle owners are renewing their lapsed policies. Digital insurance companies are the ones which benefit the most from this, reported Business Standard.

“With the new regulations, people are now voluntarily coming in and renewing their policies. We have seen a rise of 300% in issuance of two-wheeler insurance policies in the past few days since the new regulations kicked in,” said Ms Jasleen Kohli, chief distribution officer at Digit Insurance.

Mr Sajja Praveen Chowdary, business head, motor insurance, PolicyBazaar.com, said, “With the implementation of the amended Motor Vehicle Act, our online motor insurance sales grew by more than 500% in five days. “We are now selling about 67,000 insurance policies per day on our platform.”

Mr Subramanyam Brahmajosyula, head, underwriting and reinsuranceat SBI General Insurance, said, “The share of policies being sold to consumers with lapsed plans has grown by nearly 50%, as they look for protection against new penalties.”

Previously, the proportion of vehicles on the road that were uninsured was estimated at over 60%. One reason for this was the non-renewal of motor policies.

Source: Asia Insurance Review