The insurance regulator is cracking down on auto dealers who sell motor insurance policies without a valid Motor Insurance Service Provider (MISP) licence. The fine imposed can be up to INR500,000 ($7,223).

This will be applicable to all dealers selling motor insurance at the time of the sale of a vehicle. Motor third-party insurance is mandatory for all vehicles while the own damage component is optional. Most dealers typically sell a comprehensive insurance package that includes third-party and own damage coverage, reported Moneycontrol.

“There are still many dealers who are selling products without proper registration," said a senior regulatory official who added that action will be taken against errant entities after inspections.

There are around 25,000 vehicle dealerships in India and an additional 15,000 individual dealers operating in the market.

Holding a MISP licence will mean that these entities will be forced to offer all insurance companies’ products to customers. Complaining of anti-competition actions, sources say at least 5% dealers have been found offering products of a single insurer to customers.