IRDAI hikes third party insurance on small, medium cars by 12-12.5%https://indianexpress.com/article/business/irdai-hikes-third-party-insurance-on-small-medium-cars-by-12-12-5-5767554/

IRDAI hikes third party insurance on small, medium cars by 12-12.5%

The new rates will come into effect from June 16. The insurance regulator had in March deferred the hike in third party insurance premium due to the elections.

Insurance, IRDAI, third party motor insurance, medium private cars, insurance sector, Indian express
It has also proposed a hike in TP premium for two-wheelers and heavy vehicles for the current year.

The Insurance Regulatory and Development Authority of India (IRDAI) has increased the third party (TP) motor insurance premium for small and medium private cars by 12-12.5 per cent for 2019-20. It has also proposed a hike in TP premium for two-wheelers and heavy vehicles for the current year.

The new rates will come into effect from June 16. The insurance regulator had in March deferred the hike in third party insurance premium due to the elections.

IRDAI has proposed a 12 per cent hike in private cars below 1000 cc engine to Rs 2,072 and a 12.50 per cent increase to Rs 3,221 for cars with engine capacity of 1000-1500 cc. In May, IRDAI had proposed a hike of 14.6 per cent and 15.26 per cent in premium, respectively, for these two categories but reduced the rates after getting feedback from the public. There is no change in the premium of Rs 7,890 for cars above 1500 cc capacity. In the case of two-wheelers (between 150 cc and 350 cc), it has increased the TP insurance cover by 21.11 per cent to Rs 1,193. For two-wheelers between 75 cc and 150 cc, it hiked TP rate by 4.44 per cent to Rs 752. The premium for two-wheelers above 350 cc remains at Rs 2,323.

In the case of goods carriers with gross vehicle weight (GVW) up to 7,500 kg, it has decided to increase the TP premium from Rs 14,390 to Rs 15,746, for vehicles with GVW between 7500 kg to 12,000 kg, the rate will go up from Rs 24,190 to Rs 26,935 and for vehicles between 12,000 kg to 20,000 kg, the rate will rise from Rs 32,367 to Rs 33,418.

Advertising

IRDAI has introduced two new categories. In these, the electric vehicles have been introduced on the basis of motor power and their rates are around 15 per cent lower than that of traditional fuel vehicles. The other one is the category of Quadricycle in the private car segment where the rates have been kept at par with the traditional fuel vehicles to give a boost to this new emerging segment.

In the commercial segment too, two new categories have been introduced. The first one is the quadricycle, which is an upcoming segment for intra-city shared mobility. TP rates are kept as

PCV (public carrying vehicle) 3W rates for this upgraded version which is likely to help the industry to promote the vehicle segment in the market. The second new category to be introduced is the school bus with rates kept lower than other buses.

“This will bring in a further categorisation in the risk segment between school and route buses. This will serve as an incentive for a segment which has a lower loss experience … “ said Gurneesh Khurana, president and business head — motor, Bajaj Allianz General Insurance.

In March 2019, IRDAI had decided not to increase the annual premium for Third Party (TP) policies until further orders. Insurers were then expecting TP premium, currently regulated by IRDAI, to rise by 20-30 per cent going by last 6 years’ trend. Over the last 6 years, third-party premiums increased by 29 per cent for car and 23 per cent for two-wheelers on an average. “The new TP rates have been quite customer-centric and keeping in mind the developments in the automobile industry. The rates for long term policies for new private vehicles have been kept the same,” Khurana said.

Every year, the regulator decides the third party insurance premium that remains the same across all the insurers. The premium is evaluated considering the annual claims data of all insurers across different cubic/engine capacity of the vehicle. As per The Motor Vehicles Act, 1988, it is mandatory to insure vehicles with at least third-party insurance cover.