Increase In Third Party Motor Insurance Premium – What You Must Know
As per IRDA, third party insurance premium will get costlier from April-1. India’s Insurance Regulator is planning to come up with some revised premium rates. As per the new FY-18 insurance rates, the Insurance Regulator and Development Authority of India (IRDAI) has proposed up to 50-percent hike in premiums including several motor segments like mid-segment cars, SUV’s etc. Despite this change, there seems to be no proposal to increase the third party car insurance for smaller cars.
IRDAI has released a draft that lists revised premium rates for third party motor insurance and has invited stakeholders to give in their feedback up to March 18, 2017. TS Vijayan, IRDAI chairman says, the draft is ready and now we seek opinion from different stakeholders. Hike in third-party motor premium is bound to happen and cannot be avoided under any circumstances. He further states, the rise in the third party insurance premium rates is solely dependent on the feedback received from the stakeholders.
The mid-segment cars would likely see a hike of INR 3,355 in the insurance premium, while cars with engine capacity above 1500cc might get a hike of INR 9,246. The revision of rates is sure to not include cars whose engine capacity lies below or up to 1000cc. Also, the rate for cars whose engine capacity is 1500cc or more has been revised to INR 9,246 from INR 6,164 creating a gap of nearly INR 3k.
Surprisingly, increase in third party insurance premium has been proposed for entry level and performance category models. As per the proposal, rates are supposed to increase to INR 1,194 from the pre-existing rate of INR 796 and this is exclusive to super-bikes and sports bikes.
Just like cars, again there seems to be no change in rates for two-wheelers with engine capacity up to 75cc; it’s still the same at INR 569. We also see a change of rates from INR 619 to INR 720 this year for vehicles with engine capacity above 75cc but less than 150cc; whereas, rates for vehicles with engine capacity in the range of 150cc to 350cc have risen from INR 693 to INR 978.
TS Vijayan in support of hike says, Insurance is too similar to pooling and the claim amount keeps varying over the time. This is safe when there is a fixed compensation, however, in case of third party motor premium it’s not the case, and hence came the need for increase in third party insurance premium rates.
The third party insurance premium rates for commercial vehicles are also bound to rise depending upon the categories of CVs. They would be different for different modes of transport like; rates of tractors with engine capacity of 6HP would rise from INR 510 to INR 765. IRDAI may also increase rates for e-rickshaws alongside vintage cars that are likely going to see lower rates. The organization has proposed a 25-percent discount in the rates. To avoid confusion, a car would be counted as Vintage Car only if it’s certified by Vintage and Classic Car Club of India.
IRDAI chairman also highlights the importance of innovation and usage of innovative tools in the insurance industry as he believes it will lure investors with low rate premiums. The entire process involved in buying or selling the insurance happens with the help of an individual and hence a certain amount of expense is required. With the intrusion of technology, there are chances of facing certain variations due to which a premium would come down.
Third party premium is mandatory for vehicles and each financial year, IRDAI revises premium rates. Currently, the proposed rates have been calculated on the basis of accident-related data received from the Insurance Information Bureau of India (IIBI).