IRDAI Announces Hike in Third Party Insurance Price

Third-party insurance premium for cars, two-wheelers and transport vehicles may go up with the regulator Insurance Regulatory and Development Authority of India (IRDAI) proposing a substantial increase in premium rates for the current financial year. They have proposed to increase the Motor Third Party (TP) premium rates for cars below 1000 cc to Rs 2,072 from the existing Rs 1,850 for the fiscal year 2019-20. For cars that fall between 1,000cc and 1,500cc, a premium is being proposed to be increased to Rs 3,221 from the existing Rs 2,863. However, for luxury cars (with engine capacity of over 1,500cc) no change in TP premium has been proposed from the existing Rs 7,890.

Normally, the TP rates are revised from April 1. However, the IRDAI had decided to continue with the old rates until further order. Now, the regulator has come out with a draft of new rates for TP premium for the current financial year.

It has sought comments from stakeholders on the proposed rates till May 29.

According to the draft, TP for two-wheelers below 75cc is proposed at Rs 482, up from Rs 427. The hike has also been proposed for those between 75cc and 350cc adding up to Rs 752. When it comes to Superbikes (exceeding engine capacity of 350cc) no rate hike has been proposed.

No change has been proposed in the single premium rate - 3-year for new cars and 5-year for new two-wheelers.

The IRDAI has also proposed a discount of 15 per cent, on Motor TP premium rates for electric private cars and electric two-wheelers and it also does not propose to raise TP premium rates for e-rickshaw. However, the rate could go up in case of school buses. The rate increase has also been proposed for taxis, buses and trucks and tractors.

IRDAI said the data provided by the Insurance Information Bureau of India (IIBI) has been used for arriving at the Motor TP premium rates and the claims paid data in respect of each of the accident years starting from the year 2011-12 up to 2017-18 has been considered. Also, gross written premiums for the 2011-12 to 2017-18 have been considered.