IRDAI revises third party motor insurance premium after widespread protest

Following widespread protest against the steep hike in third party motor insurance premium, IRDAI has reduced its rates from 40% to 28%.

In March, IRDAI came out with a circular in which it hiked premium rates by 40% across various motor segments. The insurance regulator subsequently revised the premium rates after various transport associations went on an indefinite strike against the hike.

According to the latest circular, the new third party premium for private cars, with engine capacity not exceeding 1,000cc, remains unchanged at Rs2,055. Very few car models, though, come under this segment. However, for high-end cars, with engine capacity between 1,000cc and 1,500cc, the premium had increased from Rs2,237 to Rs3,132, but after the revision it was reduced to Rs2,863. The premium of cars with engine capacity above 1,500cc had earlier increased from Rs6,164 to Rs8,630; it was brought down to Rs7,890 following the protest. Almost 80% of cars are in this category. The premium rates for both the categories have increased by 28%, a substantial hike nevertheless.

Two-wheelers

In the two-wheeler category, the premium for engine capacity between 75cc and 150cc has gone up by 16%, from Rs619 to Rs720. There was no revision in the premium in this category. For bike models, with engine capacity between 150cc and 350cc, IRDAI has hiked the rates by 28%, from Rs693 to Rs887; it had earlier gone up to Rs970. The hike rate for super bikes, with engine capacity exceeding 350cc, stands at 28% as well, up from the present Rs796 to Rs1,019. Before the revision the premium stood at Rs1,114.

IRDAI said, “The new notification will override an earlier order issued on March 28, 2017. The new premium schedule shall apply retrospectively with effect from April 1, 2017.” This means general insurance companies will have to return the additional amount they have collected for the policies sold during April 1-17, 2017.

Third party premium rates (in Rs)

Source: IRDAI