In three years, third party insurance premium for your car has risen 70%

Third party motor insurance premiums for private cars have gone by an average of almost 70 percent in the last three years.

Data from the Insurance Regulatory and Development Authority of India (IRDAI) shows that insurers have implemented an increase ranging from 40 percent to 96 percent in the cost of the policy.

In financial year 2015-16, the premium for a 1500cc car was Rs 1,598 on an annual basis. This has risen to Rs 3,132 from FY18 onwards. Similarly, for a high-end car exceeding 1500cc, the premiums have gone up to Rs 8,630 per annum from Rs 4,931 in FY16.

Two-wheelers including motorcycles, bikes and scooters have seen a 10 percent to 75 percent hike in the third party premium over the past three years. Here, the 150cc-350cc segment has seen the highest increase of 75 percent and the premium stands at Rs 970 in FY18 from Rs 554 in FY16.

From April 1, new rates for motor third party insurance will be applicable.

As per the Motor Vehicles Act 1988, no vehicle is allowed to run on Indian roads without having a third party insurance cover. This cover protects the owner of the vehicle against third party liabilities arising from accidents. The pricing of this cover is regulated by IRDAI and revised on a yearly basis.

The data supplied by the Insurance Information Bureau of India (IIBI) for the experience period comprising accident years from 2011-12 to 2015-16 in respect of Gross Written Premiums and amount of claims paid up to March 31, 2016 has been utilised for analysis and arriving at the rates. Claims, engine capacity, model of the vehicle as well as inflation costs are taken into account for arriving at the new premiums.

In the retail segment, cars have seen the highest impact with respect to premium increase. This is owing to the higher number of claims from road accidents.

Data infographics by Ritesh Presswala

According to the report compiled by the Transport Research Wing of the Ministry of Road Transport & Highways, the total number of road accidents increased by 2.5 percent from 4,89,400 in 2014 to 5,01,423 in 2015. The total number of persons killed in road accidents increased by 4.6 percent from 1,39,671 in 2014 to 1,46,133 in 2015.

While a higher premium hike was proposed, the regulator has moderated the rates in some categories. IRDAI has also warned insurers against denying or refusal to issue a policy to any individual or vehicle owner.

On the non-retail side, commercial vehicles that transport goods will see a 15-40 percent across categories from April 1 compared to a year ago. Insurers had proposed a 50-60 percent premium increase in this segment to deal with increasing losses and higher claims.

There is only one segment where there is a steep fall in premium.

The regulator said that with respect to vintage cars segment, there is no substantial data of past experience. Therefore, a discounted price of 25 percent will be offered for those private cars certified as vintage cars by Vintage & Classic Car club of India.

Some companies often ask individuals to buy a new policy with the revised rates. To curb this practice, IRDAI has said that insurers cannot cancel current insurance policies and issue fresh policies to effect new premium rates.