Vehicle Insurance Premium Set to Increase, IRDAI Proposes Hike in

24/05/2019

Vehicle Insurance Premium Set to Increase, IRDAI Proposes Hike in Third Party Insurance Price

Third-party insurance premium for cars, two-wheelers and transport vehicles may go up with the regulator IRDAI proposing a substantial increase in premium rates for the current financial year. The Insurance Regulatory and Development Authority of India (IRDAI) has proposed to increase the Motor Third Party (TP) premium rates for cars below 1000 cc to Rs 2,120 from the existing Rs 1,850 for fiscal 2019-20.

Similarly, for cars falling between 1,000cc and 1,500cc also, a premium is being proposed to be increased to Rs 3,300 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, this time, 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 75 cc is proposed at Rs 482, up from Rs 427. Hike has also been proposed for those between 75cc and 350cc. However, no rate hike has been proposed for superbikes (exceeding 350cc).

Also, 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. 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. The premium on tractors may also up.

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, it added.