New insurance rule shoots up 2-wheeler prices

Source: The Hitavada      Date: 08 Oct 2018 09:49:42


 

By Ravi Chandpurkar,

Dealers are unhappy with the rule. They are demanding Insurance Regulatory Development Authority of India to reconsider the decision


Buying a new two-wheeler has become costlier as the Insurance Regulatory and Development Authority of India (IRDA) has introduced new insurance rule making it mandatory for dealers to provide insurance for a term of five years compared to only one year earlier.


The new insurance rule has made two-wheeler prices dearer by Rs 7,000 to Rs 10,000 which comes to around 15 per cent to 20 per cent of the cost of two-wheeler. The amount could go up depending on the model of the bike. This has disappointed two-wheeler dealers saying a rise in prices would be a heavy burden on the shoulders of customers and would impact demand during the festival season.


The new insurance rule has made it mandatory to provide one year comprehensive insurance and four years third party insurance. According to the new rule, the insurance cover has been hiked from Rs 1 lakh to Rs 15 lakh so that sufficient compensation could be given in case of accident or death. Also, insurance duration has been increased from one year to five years. The customer would have to pay upfront at the time of buying a new two-wheeler. Earlier, the insurance premium was just Rs 50 for a cover of Rs 1 lakh per year.


But, according to the new insurance policy all this has changed. For example: The insurance cover has steeply risen to Rs 15 lakh making it compulsory for customers to pay Rs 750 for a year. The third party insurance which is Rs 720 for one year.
Now, a customer has to pay comprehensive plus third party plus 18 per cent GST (Rs 750+Rs 720+18% GST=Rs 1,734.6 x 5 years=Rs 8,673). The amount could change as per make of bike, said sources on the condition of anonymity.


Two-wheeler dealers are opposing the move saying that the IRDA should reconsider the decision and introduce the new rule in a phased manner. Although, the new rule has been considered with good intentions and compassionate grounds benefiting the buyer as an accident could affect and put at risk the entire family.


Dealers are saying that they do not get any type of commission from an insurance company for providing this service. Instead, it has increased the work load of dealers. Already some two-wheeler dealers are saying that the new policy has pinched their pockets and affected demand with lower sales volumes.


“Every year, we always expect huge sales during the coming festival of Dusshera and Diwali and for which we have to do lot of exercise as their is competition in the market. Our team takes extra efforts for promotion. Now, as the insurance premium has been hiked, it is bound to hit our sales figures,” said a dealer.