In a shocking discovery, Central agencies (DGCEI) in India have unearthed a fake invoice scam and is in the process to penalise certain Car Insurance Firms and Car dealers.
As a Car purchases, whenever you go to buy your preferred car, the Car dealers’ representative always scouts you for selling “package insurance” to you. Not only are these insurance products priced high, but they are also being sold against IRDA norms, in spirit.
The Car dealers are not doing any service to you, instead, they are profiting, in some cases up to 45% of the money that you pay as premium. This is incentive enough for them to force you to buy an insurance of their choice.
This was being done against IRDA norm of not paying more than 10% as commission to the insurance distributors. There are couple of other norms which were being broken. The probe was conducted by the Chennai zonal unit of the DGCEI against 16 motor insurance companies for wrongly availing cenvat credit on the fake invoices of the car dealers. This was being done as a process to pass on >10% insurance commission to the Car Dealers in question.
Taking Insurance from your car dealer has become a norm in India, largely due to ignorance of buyers from purchasing it online as well as because of the push from Car Dealer’s representative assuring unsuspecting customers of a smooth sale.
Hopefully, this will put at least a restrictions on the excess payment being made to this channel. It will also make Indian consumers aware of the benefits of taking an insurance online.
Before you buy your new car, check for available insurance quotes online. This will put you in a much better position to take informed decisions.