Coronavirus pandemic | IRDAI defers motor insurance premium hike
While the regulator had put out a draft on March 5 proposing a marginal hike in third party premiums, this decision has been deferred until further notice.
March 27, 2020 / 06:10 PM IST
The insurance regulator has decided to keep the motor third party (TP) insurance rates unchanged beyond March 31 amidst the coronavirus (COVID-19) outbreak. While Insurance Regulatory and Development Authority of India (IRDAI) had on March 5 released a draft proposal to increase TP premiums by 2-10 percent from April 1, this has now been deferred until further notice.
“IRDAI hereby extends the validity of premium rates beyond March 31, 2020, until further notice,” said the order.
Motor third party cover is taken for protection against financial liabilities in case of an accident. If an individual’s insured vehicle hits another vehicle passenger or pedestrian causing death or disability, the insurer pays the claims.
Irdai regulates the motor TP premium and this is revised on a yearly basis (except long-term policies for cars, bikes where it changes every three years and five years respectively).
The insurance regulator revises the premium rates every year depending on the vehicle type, engine capacity and past claims experience.
The third-party motor policy is mandatory for all vehicle owners, though 50 percent vehicles running on Indian roads are uninsured.
Due to the COVID-19 pandemic, companies have announced a temporary shutdown. There have also been pay-cuts announced by firms and a motor premium hike would have adversely impacted individual vehicle owners.
Transport lobbies had also said that a hike in premium would have impacted their revenues since business is almost shut, except transport of essential goods. Large commercial trucks are considered the riskiest vehicle category in India and hence are charged the highest rate of premium by insurers.