IRDA can change this- IRDA had issued the MISP Guidelines in 2017 with an intention to rationalize the process. Also, its purpose was to bring the vehicle insurance sold by the vehicle dealers under the provisions of the Insurance Act-1938. MISP means a vehicle dealer appointed by an insurance company or an insurance intermediary unit, which also provides insurance services for vehicles it sells.
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IRDA formed committee in 2019 In 2019, the regulator constituted a committee to review the MISP guidelines. The committee has made several recommendations in its report for the systematic operation of motor insurance business through MISP. The committee also reviewed the current practice of taking premium payments from customers while making motor vehicle insurance policy, among other issues.
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Lack of transparency in cost of new vehicle premium The committee said that in the current system, there is a lack of transparency about the cost of paying insurance premium for the first time a customer buys a vehicle from a vehicle dealer. In this, payment is made by a single check by the customer. MISPs pay their accounts to the insurance company, in which case the customer does not know how much the insurance premium paid by them is because it is included in the cost of the vehicle itself.
The risk of loss to the vehicle owner – The committee has said in its recommendation that the lack of transparency is not in the interest of the policyholder, as the customer does not know the true cost of insurance. Also, the customer does not get information about coverage options and concessions etc. Therefore, the committee recommended that the customer should pay directly to the insurance company while purchasing a new vehicle.