‘Technical issue’: Motor third party cover hike to be delayed and revised rates may come into effect after May 15

“There were some technical issues for which the draft proposal has to be reissued. Now the revised rates can only be implemented after May 15 after completing the entire set of legal formalities including insurers notifying their clients about the new rates,” sources said. General insurers will be getting an opportunity to revise the motor third party rates after three years since last revision had happened in May 2019. The annual hike was put on hold due to the Covid pandemic that hit the country in March 2020.

Insurers collected Rs 38,570 crore as third party motor premium till February 28 in the fiscal 2021-22. “Notice is hereby given that the said draft rules shall be taken into consideration after the expiry of a period of 30 days from the date on which the copies of this notification as published in the Gazette of India, are made available to the public,” the Ministry said while reissuing the proposal on March 17. Objections and suggestions to these draft rules, if any, may be sent to the joint secretary (MVL, Transport & Toll), Ministry of Road Transport and Highways and Insurance Regulatory and Development Authority of India, the ministry said.

Earlier, in a relief for the customers, after taking over the exercise from the insurance regulator, Insurance Regulatory and Development Authority of India (Irdai) for the first time, the Ministry of Road Transport and  Highways had proposed revising the motor third party premium rates mostly in the range of 5 to 10 per cent for the next fiscal.

Further, in a bid to promote environment friendly vehicles, the draft notification has proposed a 15 per cent discount for electric private cars, electric two wheelers, electric goods carrying commercial vehicles and electric passenger carrying vehicles. The third party motor premium, which is mandatory for vehicles, is the only segment that is still regulated by the government/ Irdai.

In the draft notification, the rates for private cars with 1,000 cubic capacities (cc) has been proposed at Rs 2,094 against the existing rate of Rs 2072. Similarly, for private cars with 1,000 cc to 1,500 cc, the premium has been suggested at Rs 3,416 against existing rate of Rs 3221. Premium for above 1,500 cc private cars have been planned at Rs 7,897 against the current rate of Rs 7,890.

The cover on two-wheelers over 150 cc but not exceeding 350 cc is proposed to be hiked to Rs 1,366 against the existing rate of Rs 1193. However, for two-wheelers over 350 cc, the proposed premium at Rs 2,804 is at a higher range against the existing rate of Rs 2323.

The third-party insurance cover is limited to the damage to the vehicle and life/ treatment of the person in the other vehicle involved in the accident. For damage to the own vehicle, the owner will have to take a comprehensive cover.