The Insurance Regulatory and Development Authority (Irda) has hiked the premium for third-party motor insurance from April 1, 2014.
However, Irda has reduced the quantum of increase from what it originally proposed in the draft recommendations released in February 2014. For passenger cars below 1,000 cc, it has hiked the third-party (TP) premium from Rs 941 to Rs 1,129. Its draft proposal was for a premium of Rs 2,227.
For passenger cars with engine capacity between 1,000-1,500 cc, the TP premium will go up from Rs 1,110 to Rs 1,332 while its draft proposal sought a higher premium of Rs 1,677. For engine capacity above 1,500 cc, the premium will go up from Rs 3,424 to Rs 4,109 as against the draft proposal’s Rs 4,295. In the case of two-wheelers, Irda has hiked the TP premium on vehicles of 350 cc and above to Rs 884 from Rs 804. In the draft, it had proposed a reduction to Rs 306. For bikes between 150-350 cc capacity, the premium will be Rs 462 (Rs 420 earlier) and for 75-150 cc Rs 464 (Rs 422).
While TP motor insurance is mandatory for all vehicles plying on Indian roads, it is a loss-making business for the general insurers. Motor TP pricing, which is still regulated by the Irda, covers liability arising from third-party claims due to accidents.
According to insurance sources, general insurers had asked Irda to consider an increase of 50-60 per cent in TP premium in view of the higher provisioning — currently at 210 per cent — for the declined risk pool.