Third party motor insurance cover costs to increase with latest IRDA proposal

According to a latest proposal by Insurance Regulatory and Development Authority (IRDA), a 38.87% increase in Third Party (TP) motor insurance for private cars across all sub classes will be applicable.

Mumbai, India (prHWY.com) March 14, 2013 - According to a latest proposal by Insurance Regulatory and Development Authority (IRDA), a 38.87% increase in Third Party (TP) motor insurance for private cars across all sub classes will be applicable. This revision is based on the exposure draft for the revision of premium for car insurance. This hike will be applicable from April 2013 and the TP cover for your car insurance India will cost you more.

This revision is likely to affect entry-level cars (below 1000CC segment) the most because a rise in the TP cover as high as 85% is proposed for this group. Cars like Alto, Eon, Spark, Nano comprise this group and make up the bulk of ownership for cars in India. For 1500 CC category, the increase is expected to be only 1.4% and includes cars like Swift, Ritz, Beat, Santro and i10. For cars over-1500 CC, the premium increase is set at 43%.

For commercial automobiles too, the TP premium for motor insurance India is expected to increase in most cases. However, in two categories, the premium may come down as well. For commercial vehicles, the weighted average for this expected increase is approximately 30%.

The third-party premium price is reviewed annually by the regulator since 2011. This review is based on several parameters because of the high loss ratio in this insurance segment.

Third-party car insurance India is mandatory for all car owners owning commercial or private vehicles. The main reason for ensuring TP motor insurance is to settle claims of victims apart from the owner-driver of the vehicle. The own damage insurance cover is optional and covers the car and the owner-driver. The loss ratio in motor (TP) ranges between 120% and 200%, which implies for every Rs 100 premium collected payment ranges between Rs 120 and Rs 200. Industry sources opine that the maximum rise was fixed for the entry-level car category as it is this section which is most prone to accidents and already has a high accident rate. "The number of first-time owners is very high in this (below 1000CC) segment," a source said.

Initial revision for the TP premium occurred in March 2012 after the new guidelines were issued. This revision was challenged in the Calcutta High Court, after which IRDA issued an exposure draft asking for comments on the proposed rates. It must be noted that TP claims were earlier settled from a TP pool which stands discontinued since the last eight months.

Elaborating on the new proposals for motor insurance India, ICICI Lombard customer service chief Sanjay Dutta said it would help reduce the loss ratio. This opinion is held by several insurance experts and industry sources. However, some officials differ on this issue as they maintain that the high loss ratio in TP is mainly because of commercial vehicles, which should have been increased more.

###

Tag Words: motor insurance india, car insurance india

Categories: Insurance

Press Release Contact
Almeida Road,
Panchpakhadi,
Thane - 400602
02267120390
insuranceonline@icicilombard.com
https://www.icicilombard.com/

Link To This Press Release:

URL HTML Code