Motor insurance premium is set to become more expensive, with the Insurance Regulatory and Development Authority (IRDA) allowing up to 20 per cent increase in third party rates from April 1 in view of rising inflation and the history of claim settlement.
“The overall percentage increase in the motor third party portfolio works out to 18.9 per cent. The above rates will be effective from April 1,” IRDA said in a notification.
Charges for the third party insurance cover as per the notification will go up for two-wheelers, passenger cars and commercial vehicles.
For passenger cars not exceeding engine capacity of 1,000 cc, the revised third party premium is proposed to be hiked by 20 per cent to Rs.941 per annum. For two-wheelers exceeding 350 cc, the premium would go up by 18.30 per cent to Rs.804.
For goods carrying vehicles, excluding three-wheelers, with carriage capacity exceeding 40,000 kg, the premium would be Rs.15,035 per annum. There is no increase in case of three-wheelers used for carrying passengers for hire or reward with carrying capacity not exceeding six passengers.
In case of four-wheelers used for carrying passengers with carrying capacity exceeding six passengers for hire, the increase is to the extent of 20 per cent from the existing level.
The earlier hike, which was done in March, 2012, was disputed by the transporters’ association which had fought a legal battle with IRDA and general insurers in the Calcutta High Court. However, after eight months of litigation, the court had passed verdict in favour of the hike.
Earlier in 2012, while asking domestic general insurers to hike the provisioning — capital to be set aside to pay the future claims as it takes years to settle claims under this category — against the third party motor portfolio, the IRDA had assured general insurers that it would allow them to hike the third party motor rates gradually.
The IRDA had dismantled the third party motor insurance pool from April 1, 2011 thereby linking the premium rate with the prevailing market rate.