Good news for car owners. Having increased the third party (TP) motor vehicle insurance rates for the last few years, the Insurance Regulatory and Development Authority of India (IRDAI) has decided to keep the TP rates for cars mostly unchanged for the financial year 2018-19, while the rates have been reduced in some cases. The new rates are applicable from April 1, 2018.

“The third party rates have been reduced for the smaller cars like Alto, Kwid etc by 10% and have been kept unchanged for the mid-segment and high-end cars. This is a good news for car owners as there was a gradual increase in the TP rates for all car segments for last 4-5 years, especially high-end cars & SUVs,” says Animesh Das, Head-Product Strategy, ACKO.

The IRDAI, in fact, notified the new premium rates applicable to the third party insurance on Wednesday. The TP rates on small cars (not exceeding 1000 cc) have been brought down to Rs 1,850 from the existing Rs 2,055, which is a 10% reduction. For other categories of private cars, IRDAI has kept the TP rates unchanged – Rs 2,863 for cars exceeding 1,000cc to 1,500cc and Rs 7,890 for cars exceeding 1,500cc.

Similarly, for two-wheelers having an engine capacity less than 75 cc, the rates have been reduced to Rs 427 from the current Rs 569. For two-wheelers exceeding 75 cc but not exceeding 150, rates have been kept unchanged at Rs 720, but for bikes above 150 cc the rates have been increased because of the higher claims in this segment.

“There is a significant decrease in the premium for taxis where the taxi owner will be able to save Rs 2000 to 2700 on every policy, which is close to 15% reduction from last year. However, the rates have been increased for three wheelers by about Rs 1200,” says Das.

The rates for goods carrying vehicles like trucks, dumpers etc have been increased in the range of 10% to 25%, though the rates have been kept the same for smaller vehicles.

Industry experts say that the owners of cars and bikes with higher engine capacity are disappointed and the goods transporters have already threatened to go on strike to protest against the hike in third-party premium rates.

Whatever be the case, “from the consumers perspective, this is a very welcome move as this will bring cheer to the motor vehicle owners, specifically the ones who will save some money on their insurance premiums. This reduction in the premium rates will act as a stimulus and motivate vehicle owners to get the mandatory Third-Party Motor Insurance for their cars and bikes. It will also provide the insurers an opportunity to come up with cheaper Comprehensive Insurance policies that provide financial assistance in case of an eventuality to the owner’s vehicle,” says Devendra Rane, Founder & CTO, Coverfox.com.

In fact, there has been a year-on-year increase in the third-party motor insurance premium rates and with the implementation of GST, the tax rates also saw a jump to 18%. This increase of 3% from its previous level of 15% contributed towards a higher total premium payable by the consumers. “The increased premiums due to these factors had been making vehicle owners hesitant in renewing their motor insurances, especially those residing in tier 2 and 3 cities and other rural areas,” says Rane.

It may be noted that IRDAI revises the third party premium rates every year on the basis of claim experience which is applicable from 1st April every year. IRDAI has played a good role in managing the movement of Motor TP premium over the last few years to make it acceptable for both consumers and insurers.