Hiking third-party motor insurance premium will hit truckers hard

By: |
Chennai | Updated: May 22, 2019 7:44:26 AM

Caught under the idling fleet capacity across key trucking centres in the country with sharp fall in rentals due to poor freight availability, the truckers will find it difficult to absorb any cost escalations arising out of the proposed hike in TPM insurance premium.

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The truck industry is in for a trouble as the proposed hike in third-party motor insurance premium, coupled with an impending diesel price rise, are expected to hit the Indian freight market.

Caught under the idling fleet capacity across key trucking centres in the country with sharp fall in rentals due to poor freight availability, the truckers will find it difficult to absorb any cost escalations arising out of the proposed hike in TPM insurance premium.

At a time when the industry is going through a tough time due to slowdown in freight pick ups, the insurance regulator’s proposal to go for a hike of anywhere between 10% and 20% on TPM insurance premium will further put pressure on the truckers and hence the government should ensure that the TPM insurance be detariffed to ensure free and fair play of market forces, said the Indian Foundation of Transport Research and Training (IFTRT), the apex body tracking the truck industry for more than two decades.

IFTRT has all along been urging the union government to detariff the TPM premium revision to take it out of the regulatory clutch, where motor general insurance companies with annual bonanza of premium hike based on ‘doctored data’ to keep general public in good humour. But casualty is fair play and virtual extortion of hapless motor vehicle owners.

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The Foundation has thus been asking the government that as there are almost 25 PSU and private corporates in general (non-life) insurance business, the third party premium should be detariffed with immediate effect like own damage motor insurance premium, in which 70-80% discount is being offered. Thus, due opportunity be given to free and fair play of market forces in third party motor premium revision to insurance companies rather than Irdai annually brokeraging TPP.

It is to be noted that as there is an all round economic slowdown, the truck rentals, in nut shell, have nosedived by 15% since November 2018 and overload has been taking place over the last few months.
According to the Foundation, irrespective of exit polls, the road transport business has been put to an edge with double whammy of a possible diesel price hike to the extent of `3-4 per litre and 10-20% hike in TPM insurance premium at a time when the freight market is down with 25% drop in cargo offerings from factory gates, infrastructure projects.

Thus, coming months are expected to be a tough ride for truckers and how freight market to react to the unfolding developments is extremely worrying, IFTRT pointed out.

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