The new IRDAI mandate also means that customers don’t have to stick to a single insurance provider for longer than a period of one year and have the option to switch if they find a better option.

This is surely going to affect the insurance industry as earlier they could reel in more money.

"“The decision will help the customer with flexibility to switch to some other insurer for the OD part post one year of expiry. Also this reduces the upfront cost while purchasing a new vehicle that will have an impact on the motor insurance industry.”" - Animesh Das, Head of Product Strategy, Acko General Insurance

Earlier, the long-term option was made mandatory as many people did not renew their third-party insurance, which caused a lot of problems for commuters.

"“It may be mentioned that third party deaths due to uninsured vehicles deprive the dependent of the deceased bringing immense difficulties in their lives.”" - Parthanil Ghosh, President - Motor Business, HDFC ERGO General Insurance.

Since the pandemic has slowed down the automobile industry, the government is looking to push the sale of passenger vehicles, and it is expected that this move will be welcomed by potential car and two-wheeler buyers.