India’s Supreme Court has called for an examination of extending mandatory motor third-party insurance periods and proposed fuel restrictions for uninsured vehicles, aiming to increase coverage and support premium growth, while industry experts warn of potential cost impacts for consumers.
India’s Supreme Court has asked the insurance regulator to examine whether mandatory motor third-party cover should be lengthened to 4 years for four-wheelers and 6 years for two-wheelers, a move that could lift upfront premiums and alter how insurers sell policies. The court also floated a pilot scheme to withhold fuel from uninsured vehicles at petrol stations, in an effort to improve coverage and support premium growth.
Industry executives say the proposal could help insurers collect more premium in advance, but they caution that the higher cost would fall first on buyers. Animesh Das, managing director and chief executive of ACKO General Insurance, said the measure would not solve the deeper problem if commercial vehicles are left out, noting that those vehicles account for more than 60% of third-party claims. He also argued that the dealership channel already carries much of the business and commands high commissions, which could leave consumers paying more when policies are locked in for longer periods.
Das said the real coverage gap is concentrated in older vehicles, where many owners lapse on renewals once the mandatory period ends. ACKO estimates that renewal rates among two-wheelers fall sharply after the current 5-year compulsory cover, with only about 20% to 21% renewing in the sixth year. In his view, broader compliance depends less on longer tenures and more on lower prices, leaner distribution costs, better customer awareness and simpler claims handling.
Industry estimates suggest the change could add about ₹800 to ₹1,000 upfront for two-wheelers and ₹4,000 to ₹5,000 for private cars. The share of uninsured private cars is put at roughly 20% to 25%, compared with about 65% for two-wheelers and around 40% for commercial vehicles. A private insurer executive said the extension would likely support the industry by improving coverage and bringing in an additional year of premium early, while the hit to commissions and loss ratios would be limited.
Recent industry data underline the scale of the market. According to General Insurance Council figures, motor premium collections rose 14% year on year to ₹26,425.68 crore as of June 2026, with motor third-party premium up 12.5% to ₹15,419.12 crore. Insurers believe a longer mandatory term, combined with tighter enforcement such as fuel denial for uninsured vehicles, could increase penetration and keep premium growth moving higher.
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