The Insurance Regulatory and Development Authority of India (IRDAI) has finally decided to revise the premium rates for Motor Third Party insurance for the current financial year, i.e. 2019-20. The order comes into effect from 16th June, 2019. As per the powers provided to IRDAI under Section 14 (2) (i) of the IRDA Act, 1999, the authority has been notifying the premium rates for Motor Third Party (TP) Liability Insurance every year, starting from 2011.
“For private cars not exceeding 1000 cc, the annual TP premium has been raised from Rs 1,850 to Rs 2072, and for private cars exceeding 1000 cc but not exceeding 1500 cc the premium is raised from Rs 2,863 to Rs 3,221. However, the TP premium for private cars exceeding 1500 cc will remain unchanged , i.e. Rs 7890,” says Sajja Praveen Chowdary, Head-Motor Insurance, Policybazaar.com.
So far as changes for two-wheelers are concerned, TP premium is being increased for the first three vehicle cc slabs while the last slab will remain unchanged on the similar lines of private cars. For bikes not exceeding 75 cc the premium is raised from Rs 427 to Rs 482, for bikes exceeding 75 cc but not exceeding 150 cc the premium is raised from Rs 720 to Rs 752, and for bikes exceeding 150 cc but not exceeding 350 cc the premium will go up from Rs 985 to Rs 1,193. However, for all bikes exceeding 350 cc, the premium will remain the same, i.e. Rs 2,323.
*Vintage cars: A discount of 50% shall be allowed for private cars under Vintage cars segment certified as Vintage cars by Vintage & Classic Car Club of India.
“A detailed analysis of the proposed increments establishes a maximum increase of 12.5% for private cars and 21% for two-wheelers over the current premium after 2 years. IRDAI has been regularly increasing the Third-Party (TP) motor vehicle insurance rates for 5 years continuously since 2013, but it did not increase the same in the last financial year, i.e. 2018-19. Since the average increase in the TP premium over the last 6 years for private cars was 29% and for two-wheelers was 23%, an increase in TP premium was widely expected by the industry experts in the range of 20-30% to keep a pace with the moderation,” says Chowdary.
The authority used the data provided by the Insurance Information Bureau of India (IIBI) for deriving the Motor TP premium rates and the claims paid data in respect to each of the accident years. The data into consideration has been taken from the year 2011-12 up to 2017-18.
“Irrespective of an increase, however, it is always advised to insure your vehicle before the policy expires. Also, those who might be waiting till the last day of their renewal date need to be more cautious so that they don’t end up purchasing their policy possibly at a higher price,” advises Chowdary.