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Pay for vehicle, insurance separately, suggests IRDAI panel
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SME Times News Bureau | 25 Jan, 2021
The committee constituted by the Insurance Regulatory and Development
Authority of India (IRDAI) has recommended direct payment of insurance
premium to the insurance company while purchasing a vehicle, thereby
suggesting separate payments for both buying the vehicle and the
premium.
The Committee for Review of MISP (Motor Insurance
Service Provider) Guidelines examined the current practice of collecting
the premium payment from the customer while soliciting the motor
insurance policy.
"The customer should make payment to the
insurance company directly which is facilitated by the MISP. MISP shall
not collect the insurance premium amount in its own account and then
transfer the same to the insurance company," its report said.
As
per the panel, there is lack of transparency in the cost of insurance
premium when the customer buys the vehicle for the first time through
the dealer as the customer pays one single cheque or payment for the
cost of the vehicle and the insurance premium.
The MISP then pays
through the insurance intermediary or directly to the insurance company
through his own account. The customer does not know the insurance
premium being paid as it is subsumed in the cost of the vehicle.
"This
lack of transparency is not in the interest of the policyholder's
interest as the true cost of insurance is not known to the customer. The
customer may not be aware of the coverage options and discounts
available in the process," it said.
The committee also noted that the customer cannot negotiate with the MISP to get the best coverage at the optimal price.
"There
are also instances, where the policies are cancelled immediately after
issuance refunding the premium. In cases, where MISP is making the
payment through its account, the sources of funding is not known to the
insurer and may also lead to possible anti money laundering activities,"
it added.
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