With low levels of penetration and poor renewal of general insurance products in the retail business have prompted the general insurers to ask the regulators to allow insurance policies with longer term renewals i.e. every 3-5 years.
The retail line of business includes auto insurance, health insurance, home and personal accident insurance.
Presently, the general insurance products are renewed annually. However, some health insurers issue policies up to maximum of three years.
Mr. M Ravichandran, President Insurance of Tata AIG General Insurance said, "The ticket size is small in the retail line of business so a longer term renewal will definitely be less cumbersome for customers".
Customer acquisition, printing and issuing of policies are the major cost for all the insurance companies. For customers, long-term policies are more beneficial as they provide them with better value as insurers propose to price them lower by factoring in the no-claim discount into the premium. Along with it, a long term policy reduces the possibility of it lapsing.
Mr. G. Srinivasan, CMD, New India Assurance said, "There were some concerns that the regulator had expressed (regarding longer term policies). Long term policies mean we must have proper accounting in place and adequate actuarial support to calculate premiums on a long-term basis".