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Insurance IRDAI hikes third party motor insurance premium by up to 40%

IRDAI hikes third party motor insurance premium by up to 40%

The new rates will come into effect from April 1, 2017.
Rosevina Gonsalves Mar 30, 2017

The insurance regulator has hiked the third party motor insurance premium rates by up to 40% in FY 2017-18. Last year too, the insurance regulator had hiked the third party premium rates by up to 40%.

Earlier this month, IRDAI had come out with an exposure draft proposing a hike of up to 50% across various motor segments. However, after receiving feedbacks from all stakeholders, the insurance regulator has incorporated changes in the premium rates.

According to the final circular, the new third party premium for private cars with engine capacity not exceeding 1000cc remain unchanged at Rs. 2,055. Very few car models come under this segment. However, for high-end cars, with engine capacity between 1000-1500cc the premium has increased from Rs. 2,237 to Rs. 3,132. Also, for cars with engine capacity above 1500cc, the premium has gone up from Rs. 6,164 to Rs. 8,360. The premium rates for both the categories has substantially increased by 40%.

Similarly, in the two-wheeler category, the revised premium for engine capacity between 75-150cc has gone up by 30% from Rs.554 to Rs.720. For premium bike models, with engine capacity between 150-350cc, IRDAI has hiked the rates by 40% from Rs.693 to Rs.970. The hike rate for super bikes with engine capacity exceeding 350cc stood at 40% as well; as a result, the premium would increase from the present Rs.796 to Rs. 1,114.

Third party premium rates

Third party tariff

Old premium

New premium

Change

Private cars

1000-1500cc

2237

3132

40%

Over 1500cc

6164

8360

40%

Two wheelers

75-150cc

554

720

30%

150-350cc

693

970

40%

Over 350cc

796

1114

40%

Source: IRDAI

At the recent FICCI annual conference, TS Vijayan, Chairman, IRDAI had said, “Every year, IRDAI revises premium rates taking into account the number of claims made and loss ratios of general insurers. Many customers are unhappy with the rise in motor insurance premium rates. However, looking at the current scenario, this remains inevitable.”

Citing the rationale behind hike in the third party premiums, he said, “The gap between premium collected and claims made is very high. Also, this ratio is not fixed and keeps on varying. Considering these and the remaining factors affecting it, premiums have to be revised.”

Third-party motor premium is the only segment in the general insurance sector that is still regulated.

The new motor third party insurance premium rates will be effective from April 1, 2017.

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