NEW DELHI: In what may come as a relief to two-wheeler manufacturers and buyers, the Insurance Regulatory and Development Authority of India (IRDA) recently clarified that the owner-driver should have the choice to opt for a one-year Compulsory Personal Accident (CPA) cover or long-term CPA cover.
“It has come to our notice that insurers are offering only long-term Compulsory Personal Accident (CPA) policy for new cars and new two-wheelers along with long-term TP policy. It is clarified that it is the choice of the owner-driver to opt for a one-year CPA cover or long-term CPA cover and insurers should not compel owner-drivers to go in for long-term package policy or long-term CPA cover,” IRDA said in a circular dated October 9.
Recently, insurance costs for two-wheelers witnessed a steep hike after IRDA mandated five-year third-party (TP) insurance and then increased compulsory personal accident (CPA) cover premium from Rs 50 per annum to Rs 750 per annum.
A steep hike in the insurance cost has started hitting the sales of new two-wheelers as price-sensitive buyers, who are already struggling to cope with rising oil prices, are not ready to pay several times more for insurance at once. Experts said that the IRDA’s clarification would provide some relief to the industry.
Sugato Sen, deputy general of SIAM, welcomed the move by IRDA and said paying more for CPA was a problem for the customer.
“Upfront they would have to pay more for the CPA, which is not very encouraging. We had opposed this and they have listened to us. It was not meant to be like this,” Sen said.
“It is a big relief for two-wheeler OEMs. We continue to maintain our Buy view on Bajaj Auto (TP - 3,176) and Hero MotoCorp (TP - 4,009) and Hold rating on TVS Motor (TP - 555),” Awanish Chandra and Vikas Rajpal of Centrum Broking said.