ICICI Lombard, Go Digit shares rally as Centre likely mulls up to 25% hike in third-party motor insurance premiums

Motor third party insurance

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26 Aug, 2025 12:21

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The Centre is considering raising the Motor Third Party (TP) insurance premium based on the recommendation of the insurance regulator IRDAI, CNBC-TV18 reported on June 6 citing people familiar with the matter, sending shares of general insurers like ICICI Lombard General, Go Digit General Insurance and New India Assurance Company sharply higher.

IRDAI has proposed an increase of 18 percent on an average in third party premiums, while proposing a steeper hike of 20-25 percent for some categories of vehicles, people familiar with the development said. The Ministry of Road Transport and Highways (MoRTH) is likely to decide on the matter with in the next two to three weeks.

After the ministry takes the decision, a draft notification could be issued for public consultation, which will be followed by stakeholders’ feedback and other standard procedures before changes become effective, the report said.

Moneycontrol couldn't independently verify the development.

ICICI Lombard General Insurance Company shares surged over 7 percent to hit a three-month high. Go Digit General Insurance shares gained nearly 5 percent, a highest level last seen by the stock after nearly six months. The New India Assurance Company shares jumped nearly 2 percent on June 6.

Motor third party insurance covers for third-party liabilities during accident involving insured cars. It provides coverage against damages caused to third parties, whether they are individuals or property. It is mandatory under the Motor Vehicles Act, 1988. Third-party car insurance primarily safeguards one against losses and damages inflicted on others due to own vehicle. This includes situations like colliding with another car or damaging someone else's property. In such instances, third-party insurance will cover the resulting expenses.

The premium over such insurance have remained unchanged for the past three to four years, despite uncertainties in the sector. A 20 percent increase in third party premium may help improve the industry’s performance, the report cited analysts as saying.