Motor insurance industry representatives have asked the Insurance Regulatory and Development Authority of India (IRDAI) to consider risk-based third-party premiums, changes to insurers' knock-for-knock arrangement and named-driver policies, according to a 17 Oct 2026 report by The Economic Times. These are submissions to an open consultation, not changes to premiums, cover or renewal rules; existing policies continue under current terms.
+ +Key takeaways
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- The reported requests include risk-based third-party pricing, an end to knock-for-knock settlements and driver-linked cover. +
- IRDAI's distribution-reform consultation is still at the proposal stage, with stakeholder comments due by 25 Oct 2026. +
- There is no immediate change to a motor policy's premium, validity, claim process or renewal requirement. +
- Risk-based pricing could produce different quotes for different vehicle or driver profiles, but it does not promise a lower premium. +
What the insurers are asking for
+The Economic Times reported that industry representatives responding to IRDAI's consultation want the regulator to look beyond distributor commissions and address the underlying economics of motor insurance. The reported requests include allowing insurers to price third-party (TP) cover according to risk, ending the industry-wide knock-for-knock understanding and offering policies that name the drivers covered.
+ +IRDAI published its two-part consultation paper, Recalibrating Economics of Insurance Distribution, on 23 Sep 2026. The paper is broader than motor insurance: it discusses the structure of insurance distribution, expense limits, commissions, market conduct, transparency and safeguards against mis-selling. The regulator has not converted these proposals into final regulations. FuelPrice's earlier explainer on the IRDAI commission consultation covers the separate commission and deadline context.
+ +Business Standard reported on 15 Oct that IRDAI chair Ajay Seth was engaging with insurers and distributors before the 25 Oct comment deadline and that stakeholder feedback differed. Seth said the transition should improve efficiency without disrupting market participants. That matters for vehicle owners because a consultation response is an input to the rule-making process, not an instruction to insurers to reprice policies today.
+ +Why third-party pricing matters to drivers
+Third-party insurance protects against liability for injury, death or property damage caused to another person, and it is compulsory for vehicles used on public roads. Own-damage cover is different: it covers damage to the insured vehicle subject to the policy's terms. A motorist can therefore see the two parts discussed separately when comparing a renewal or a new-vehicle policy.
+ +The Indian Express reported in July 2026 that the last implemented hike in India's motor TP base premiums took effect on 1 Jun 2022, after a period of frozen rates. Insurers have argued that claims inflation and the cost of compensation are putting pressure on the segment. That background helps explain the industry's interest in pricing that reflects risk, but it does not mean a rate increase has been approved or scheduled.
+ +If risk-based TP pricing is eventually adopted, the practical effect could be greater variation between quotes based on factors such as the vehicle's use, category, location or assessed risk. A high-risk profile could face a higher price, while a lower-risk profile might not automatically receive a reduction. The final effect would depend on the rules, the data insurers may use and any limits imposed by the regulator or the government.
+ +What changing knock-for-knock could mean
+Under the reported proposal, insurers could move away from routinely settling a customer's own-damage claim with that customer's insurer and instead use the at-fault driver's third-party property-damage cover. In plain terms, the insurer of the driver responsible for a collision could become more directly involved in paying for the other vehicle's repair.
+ +A 2019 Delhi High Court order described knock-for-knock as an internal understanding under which each insurer indemnifies its own customer for covered vehicle damage without first establishing fault. It also said the arrangement is not mandated by the regulator. Ending or redesigning it could make fault assessment, police reporting, surveyor evidence and disputes more important. The Economic Times report also noted that the change could increase claim sizes and make underwriting more complex.
+ +This proposal concerns vehicle-damage claims and should not be read as a change to the legal third-party liability framework for bodily injury or death. Policyholders can use FuelPrice's car insurance claim process guide to review the documents and steps generally involved in a claim, while checking the wording of their own policy for the cover that applies.
+ +Named-driver cover: a possible shift in how risk is priced
+The reported named-driver idea would link cover to specified drivers, while an unnamed-driver option could carry a higher premium. This is still a proposal attributed to industry feedback. It does not currently remove the need to disclose the driver or use the vehicle within the conditions of an existing policy.
+ +For a household or business with several people using one vehicle, the eventual wording would matter more than the label. Drivers would need to understand who is covered, what happens when another person drives, how unauthorised use is treated and whether a claim can be affected by a mismatch between the declared driver and the person at the wheel. Actual offers would continue to vary by insurer, vehicle, location, cover and customer profile.
+ +What vehicle owners should do now
+There is no proposal-stage payment or renewal step to complete. Owners can check the expiry date and cover shown on their current schedule, keep the TP and own-damage portions distinct when reading a quote, and ask the insurer to explain any change in premium or claim terms. FuelPrice's guide to checking vehicle insurance validity online can help with the basic policy-status check.
+ +The next concrete milestone is the 25 Oct 2026 consultation deadline. Readers should watch for IRDAI's response, any final regulations and, if TP pricing is changed, the formal notification that states the effective date and the vehicles or policies covered. Until then, headlines about deregulation, named drivers or knock-for-knock reform describe a proposal and industry request—not a new rule.
+ +Sources
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- The Economic Times — Motor insurers seek third-party premium deregulation, end to knock-for-knock pacts — 17 Oct 2026 +
- Insurance Regulatory and Development Authority of India — Public Consultation Paper: Recalibrating Economics of Insurance Distribution, Part 1 — 23 Sep 2026 +
- Business Standard — Irdai's proposed distribution reforms aim for orderly transition: Ajay Seth — 15 Oct 2026 +
- The Indian Express — Insurers seek first third-party premium hike in four years as losses mount — 27 Jul 2026 +
- Delhi High Court — Oriental Insurance Co. Ltd. vs Ajay Gaur & Ors. — 29 Aug 2019 +
- IRDAI — Motor Insurance: third-party liability guidance — accessed 17 Oct 2026 +
This article is for general information only and is not financial, insurance or legal advice.
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