Automobile industry awaiting IRDAI decision for fixing cover price for cabs

IRDAI has not yet fixed a uniform price point for selling three-year, third-party insurance covers for vehicles used as cabs. This may result in hampering the taxi sale across India.

According to sources taxi-cab sales have come to a halt in Delhi, Maharashtra, and Madhya Pradesh in recent weeks. Regional Transport Offices (RTOs) are refusing registrations after a roads ministry circular, dated November 12, mandated a three year, third-party insurance cover for both non-transport and transport vehicles.

Sales and registrations of taxis could stop across the country in the next few days, as the price point of the required insurance product for the segment is yet to be approved by the regulator, industry executives said. App-based cab aggregators and fleet operators purchase about 240,000 vehicles annually.

Taxis were, so far, being registered on purchasing a one-year, third-party insurance cover. In an order dated November 12, 2018, the Ministry of Road, Transport & Highways said: “…It has come to notice that some states are not entertaining third-party insurance in respect of new transport category vehicles for the period of three years. It is reiterated in this connection that as per… Supreme Court’s order, it is mandatory to get third-party insurance for a period of three years, whether it is used for transport or nontransport purpose.”

Third-party insurance premiums for vehicles used for commercial purposes are higher than those for private cars as they are more prone to accidents.

In an order dated July 20, 2018, the SC held that consumers would have to mandatorily pay upfront three and five years’ third-party insurance premiums on purchasing new cars and two-wheelers, respectively, starting September 1, 2018.