The third-party car insurance premium will increase from June 1

Mumbai: The government has notified revised tariffs for motor third party liability insurance with effect from June 1 based on a draft notification issued on March 21 this year. The final tariffs allow for a 15% discount for educational establishment buses compared to other passenger transport vehicles.
General insurance companies will have to scramble to update their system with the changes as the notification due date is less than a week away. Additionally, those who have already paid for coverage may have to pay the difference in premium.
Motor third-party liability tariffs are revised annually by the regulator based on a formula that takes into account the increase in the amounts of claims. The regulator had decided to adopt the formula because auto accident claims tribunals were increasing awards based on inflation.
As third-party automobile tariffs have not been revised for two years, the automobile segment has seen its premium share drop from 33% to around 30%. Meanwhile, health insurance, which was the second largest segment, saw its share of premiums increase from 30% to 33%, becoming the top line of business. Insurers hope that with the revision of premium rates, motor insurance will increase its share.
This year, the revised rates have been released by the Insurance Regulatory and Development Authority of India as well as the Ministry of Road Transport and Highways. The changes will result in bonuses for cars of up to 23% and up to 35% for two-wheelers over 75cc. The largest premium increase was for two-wheelers under 75cc, where the premium increase was over 175%.
According to a note on proposed rates by ICICI Securities, while long-term liability insurance rate increases are particularly high on a stand-alone basis, the increase in renewal premiums is less than cost inflation as well as ‘at the corresponding historical cumulative annual growth rate.
“The proposed rates imply an average increase of 2% in the renewal premium for passenger cars and 8% for two-wheelers. For long-term bonuses, the proposed corresponding increases are approximately 15% and 17% respectively. We consider these proposed increases to be sound,” ICICI Securities said in a note following the draft notification.

About Rachel Gooch

Check Also

School administration and human resources management process

Added November 11, 2022 CI News By: Saima Hamid The administration establishes policies that guide …