Motor insurance in India has worked on a simple bargain for a long time. The government fixes the third-party premium for your class of vehicle, the insurer prices the own-damage part on the car and your claims record, and when two insured cars collide each insurer pays for its own customer and moves on. On 17 October 2026 it was reported that the general insurance industry has formally asked the regulator to take that bargain apart. This article sets out exactly what was asked, what the separate consultation on commissions says, what is still true today, and why a used-car buyer should start treating the vehicle's record as part of its running cost.
What the Insurers Have Asked For
According to the reports of 17 October, general insurance companies have made four requests to the Insurance Regulatory and Development Authority of India (IRDAI). It is worth reading them as a set, because together they shift motor insurance from pricing a class of vehicle to pricing a particular car and a particular person.
- Risk-based pricing in place of regulated premiums. The industry wants premiums set on individual risk rather than on the notified rates that apply to everyone in a vehicle class.
- An end to knock-for-knock settlement. Today each insurer pays for its own policyholder's damage. The request is to move to recovery from the at-fault party's insurer. Reports note this would likely raise administrative cost and would need rules on how fault is determined, possibly framed by the General Insurance Council.
- Named-driver policies. Liability would be tied to the specific person driving. Cover for unnamed drivers would still be available, but at a higher premium.
- Scrutiny of dealer-channel costs. Insurers say overriders paid through the dealer channel and inflated repair bills undercut the caps on distribution expenses, and want these looked at.
Status check: these are requests from the industry. IRDAI has not responded publicly, no draft circular exists, and nothing in your current policy has changed. Everything in this article about what would happen "if adopted" is analysis, not a description of a rule.
The separate consultation that is actually open
There is one live IRDAI document in this area, and it is about commissions rather than premiums. On 23 September 2026 the regulator released a consultation paper titled "Recalibrating Economics of Insurance Distribution", with comments open until 25 October 2026. For motor, it proposes commission caps: nil commission for distribution entities and 2.5% for agents on third-party cover for new vehicles, and caps of 5% for intermediaries and 10% for agents on own-damage, personal accident and legal-liability covers. It would also replace the Motor Insurance Service Provider (MISP) framework, under which dealers sell insurance, with an Insurance Distribution Entity regime. This too is a proposal and not a final rule, but it is further along than the premium requests, and it targets the same dealer-channel cost the insurers complain about.
Today Versus If Adopted
Before guessing at the future, it helps to be precise about the present. Third-party premium rates are notified by the government, by the Ministry of Road Transport and Highways in consultation with IRDAI, and are the same for a given engine or vehicle class whoever is driving. Own-damage pricing is already partly risk-rated: the insurer looks at the vehicle, its age, the city zone and the claims history, which is expressed through the No Claim Bonus (NCB) that rises to 50% after five claim-free years. Our tip on own-damage versus third-party cover explains how the two halves of a policy fit together.
| Element | Today | If the requests are adopted (analysis) |
|---|---|---|
| Third-party pricing | Rates notified by the government; same for every vehicle in a class | Would move towards individual risk; how far third-party rates would be freed is not stated in the reports |
| Own-damage pricing | Partly risk-rated: vehicle, age, city zone, NCB up to 50% | More weight on the car's claim and accident record and on the driver's record |
| Claims settlement | Knock-for-knock: each insurer pays its own policyholder | Recovery from the at-fault party's insurer; needs fault-determination rules; likely higher administrative cost |
| Who is covered to drive | Any licensed driver, with the policyholder's record setting the price | Named-driver cover as the base; unnamed-driver cover available at a higher premium |
| Dealer commission | MISP framework; overriders and repair-bill practices under scrutiny | Consultation proposes nil / 2.5% caps on new-vehicle third-party and 5% / 10% on own-damage, with an Insurance Distribution Entity regime replacing MISP |
Why the Car's Record Would Start to Cost You
Under today's system, when you buy a used car the insurer's main interest in the vehicle is its make, age and city. The claims history that matters is yours, through your NCB, and the seller's claims on the same car fade into the background. That is the part that would change first under risk-based pricing. An insurer pricing an individual car would want to know whether it has been through accident repairs, whether the cover lapsed for a stretch, whether the registration carries a blacklist flag, and whether challans are pending against the number. Each of those is a data point already recorded somewhere, and each would be a reason to quote higher.
This is analysis rather than a published pricing model, but the direction is hard to miss. The same record a buyer should already be reading for ownership and legal reasons would become a premium input. A car with a clean history would be cheaper to insure than an identical car with two claims and a lapsed year, even in the hands of the same buyer. For a used-car market that prices cars largely on age, kilometres and condition, that is a new variable, and the buyer who checks it first is the buyer who negotiates with it.
The insurance-status record lags: the registry record of a policy can run behind the actual policy by a day or two after renewal. Read the recorded validity as a prompt to ask for the policy document, not as the last word. Our piece on the insurance status lag in the VAHAN record explains how to read the two side by side.
And your own record, through the named driver
The second shift is about the person. Named-driver cover ties the price to whoever is actually going to drive. Combine that with the challan-linked licence rules already in force, under which repeated offences in a calendar year invite action against the licence, and your own challan history becomes part of your premium. Our explainer on five challans a year and the licence covers the enforcement side. The pricing side would follow naturally: a named driver with a string of challans is a higher risk on paper, and would be quoted accordingly. A household that today insures one car for anyone in the family to drive would also need to decide who to name, and pay more if it wants the unnamed-driver option.
A Worked Illustration
Take a 2019 petrol hatchback bought used in a metro, with an insured declared value of about Rs. 4 Lakh. The figures below are illustrative. They are not quotes, and actual premiums vary with the insurer, the city zone, the add-ons and the exact variant.
| Scenario | Own-damage premium (illustrative) | Why |
|---|---|---|
| Seller's renewal today | Roughly Rs. 4,000 to 6,000 | A base own-damage premium of roughly Rs. 8,000 to 12,000 on an IDV of about Rs. 4 Lakh, reduced by a 50% NCB the seller has earned over five claim-free years |
| Buyer's first year today | Roughly Rs. 8,000 to 12,000 | The NCB belongs to the seller and leaves with them; the buyer starts at zero and pays the full own-damage premium |
| Buyer's first year, if risk-based pricing is adopted | Could be higher than Rs. 8,000 to 12,000 | If the car's own claim history, a lapsed cover or pending challans are loaded into the quote, the base premium would rise before any NCB applies; the size of any loading is unknown |
Two things stand out. First, the jump from the seller's renewal to the buyer's first year already exists under today's rules, because the NCB does not transfer with the car. Our report on why the NCB does not come with a used car walks through that in detail. Second, risk-based pricing would stack on top of that jump for a car with a poor record, and would do nothing for a car with a clean one. Checking the record before you buy is therefore not only about avoiding a bad car; it is about knowing which of the two cars you are insuring.
Read the car's record before you price the insurance
RC details, insurance validity as recorded, owner count, lender flag and pending challans on one registration number. Full report Rs. 149; RC check alone Rs. 99.
What a Used-Car Buyer Should Do Now
None of this requires waiting for IRDAI. The steps that protect you under a risk-based system are the same steps that protect you today; the proposals simply raise the cost of skipping them.
- Check the vehicle's insurance status and record first. Run the Vahan Verify full report on the registration number. For Rs. 149 it returns the RC details, the insurance validity as recorded, the owner count, the lender flag and the pending challans. If you only need the registration details, the RC check is Rs. 99. Read a lapsed or expired cover as a flag: ask the seller why, and expect it to show up in any future risk-rated quote.
- Ask for the policy and the claims history. The policy document shows the current insurer, the expiry and the NCB the seller has earned. Ask directly whether any claim was made on the car. A seller who has kept the car claim-free has something worth showing you.
- Budget for the full first-year premium. You start at zero NCB. On an older car with a modest IDV the own-damage premium is a meaningful share of the purchase price, and under risk-based pricing it could be more. Put the number into your offer. If you are comparing a used car in Mumbai with one in Bengaluru, remember that the city zone is already a pricing factor.
- Transfer the policy inside 14 days. Under Section 157 of the Motor Vehicles Act the insurance follows the vehicle for third-party purposes for 14 days after the sale, and within that window you must apply for the policy to be transferred to your name. Miss it and you are driving an uninsured car in the eyes of the law.
- Clear your own challans. If named-driver pricing arrives, your record is priced alongside the car's. Settling pending challans now is cheap compared with carrying them into a risk-rated quote.
Which check for which question: the RC check at Rs. 99 tells you whether the registration is what the seller says it is. The full report at Rs. 149 adds the insurance validity as recorded, the owner count, the lender flag and the challan list, which is the set a risk-based insurer would care about. Both read the VAHAN database on the number you enter.
For Sellers: A Clean Record Is Now a Selling Point
If you are selling, the same logic works in your favour. A car with continuous cover, no claims and no pending challans is a car a buyer can insure cheaply, today and under any risk-based regime. Keep your NCB: it is yours, not the car's, and you can carry it to your next vehicle, as our tip on transferring the NCB when you sell explains. Then list the car where the buyer can see the registration details drawn from the record. A verified listing on VahanBazaar costs Rs. 99 and is built from the VAHAN record on your registration number, so the buyer's first check and your listing agree before you ever speak.
What to Watch
Three dates and one silence. The commission consultation closes on 25 October 2026, and whatever IRDAI finalises on dealer distribution will be the first visible outcome. The insurers' premium requests have no timetable; watch for any IRDAI discussion paper or draft circular, which would be the first formal step. The knock-for-knock change would need fault-determination rules before it could work, so expect that to lag the pricing debate. And until IRDAI says anything in public, treat every headline about "new motor insurance rules" as a request under consideration, which is exactly what it is.
For the buyer, the practical conclusion does not depend on the outcome. The car's record is becoming a running cost, and the cheapest time to learn it is before the money changes hands.
This article is general information based on published reports and IRDAI's consultation paper, and is not insurance, legal or financial advice; confirm current terms with your insurer before you act.
Know the Record Before You Insure the Car
Insurance validity as recorded, owner count, lender flag and pending challans on any registration number. Rs. 149 for the full report; Rs. 99 for the RC check alone.
Frequently Asked Questions
No. As reported on 17 October 2026, general insurers have asked IRDAI to move to risk-based pricing, named-driver policies and an end to knock-for-knock settlement. These are requests from the industry. IRDAI has not responded publicly and there is no draft circular. The separate consultation paper on distribution commissions, open for comments until 25 October 2026, is also a proposal and not a final rule.
It could, for some cars and some drivers, but nothing has changed yet. Own-damage pricing already reflects the vehicle, its age, the city zone and the claims history through the No Claim Bonus. A fully risk-based system would likely give more weight to the car's accident and claim record and, with named-driver cover, to the driver's own record. A buyer who starts at zero No Claim Bonus on an older car should budget for a higher first-year premium than the seller was paying, under today's rules or any future ones.
No. The No Claim Bonus belongs to the policyholder, not to the vehicle. The seller can carry it to their next car, up to the 50% maximum earned after five claim-free years. The buyer starts at zero and pays the full own-damage premium in the first year. The third-party part of the policy follows the vehicle for 14 days after the sale under Section 157 of the Motor Vehicles Act, within which the buyer must apply to have the policy transferred.
Check that the policy is in force, how long it has to run, and whether the car's record shows anything that would push a risk-based quote up: accident repairs, a lapsed cover, pending challans or a blacklist flag. The Vahan Verify full report on VahanBazaar.in costs Rs. 149 and returns the RC details, the insurance validity as recorded, the owner count, the lender flag and the pending challans on the registration number. The RC check alone is Rs. 99.