The Insurance Regulatory and Development Authority of India (IRDAI) has proposed an almost 50 percent rise in third-party motor premiums for cars as well for commercial vehicles and heavy vehicles. However, with heavy lobbying to reduce the rates, final rates applicable are expected to be lower.
Your third party motor premiums may increase by 30-45 percent as the Insurance Regulatory and Development Authority of India (IRDAI) has proposed an annual increase in the motor TP rates.
S Thirunavukarasu, Country Head, Underwriting and Claims (Motor), Royal Sundaram General Insurance, said that the proposed hike is in line with the industry’s overall claims experience and expectations.
“If implemented in its current form it will help to mitigate the loss to a great extent. While there has been an increase of about 50 percent proposed for private cars that are more than 1000cc, for cars which are lesser than 1000 cc, no increase has been proposed,” he added.
Arasu said that taxis which have an engine capacity less than 1500 cc will also be covered. They feel that there should have been at least 25 percent increase proposed in this segment as majority of the cars in the Indian market including the taxis will fall under this category and where the frequency of the claims is much higher.
However, sources said that the final hikes approved by the regulator will be much less than the proposed hikes to suit policyholder interest. Third party motor insurance policy is mandatory and the prices of the products are revised on an annual basis.
“Transport lobbies have asked for a lower hike so that vehicle owners are not burdened. We are hopeful of our demands being considered,” said a transport association official.
As per an exposure circular by IRDAI, the rates have been arrived on an actuarial basis after factoring in the necessary assumptions.
For the first time, the regulator has proposed a decrease in rates. IRDAI said that with respect to vintage cars segment, there is no substantial historical data. Therefore, a discounted price of 25 percent of the proposed rate based on the erstwhile Indian Motor tariff (IMT) is proposed, for those private cars certified as vintage by Vintage & Classic Car club of India.
Usually, the regulator proposes a higher rate of premiums based on past claims data from insurers. However, the final rates implemented are usually lower than the ones demanded.
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