The new move from the government is looking to open the insurance sector and allow 49 percent foreign direct investment. In the country there are almost 17 private sector and four PSU general insurers in the country.

According to a report by KPMG, the under-penetration is driven by lack of overall financial awareness, lack of understanding of general insurance products, low perceived benefits and propensity to purchase insurance based on reactive drivers such as insistence by financers and statutory requirements.

General insurers also feel that such a product will boost the renewal business, which is quite low in rural areas. "The regulator should look at allowing a longterm cover for commercial vehicles such as tractors and mini utility vehicles. These can be further linked to the registration and fitness certificate," said a CEO of a private general insurer, requesting anonymity.

A senior official with a PSU general insurer said some issues need to be sorted out before such a product is rolled out. "For example, you need a mechanism to factor in the 'no-claim bonus' and subsequently the pricing of such a policy," he said.

According to the Economic Times there are 10 lakh outstanding motor third-party claims involving an amount of about 22,000 crore till date. It is seen that the customers, never complain, during the hassles of renewal every year, even if they are bombarded months before the policy is to expire.