Come April 1, the premium rates for motor third party liability only cover will undergo an upward revision.
The Insurance Regulatory and Development Authority of India (IRDA) has notified a detailed list, setting out the third party liability premium rates for vehicles of assorted categories.
The premium rates are calculated on the basis of a specified formula. These will be notified every financial year by the IRDA. The formula is devised taking into consideration the experience measured in terms of average claim amounts, frequency and expenses involved in servicing the motor third party business.
The IRDA had done an extensive actuarial review of the premium rates for motor third party liability only cover for different categories of vehicles for years 2007-08 to 2010-11. The rates for 2012-13 are calculated using the “average growth rate in severity assuming that the average frequency remains constant.”
According to the newly-notified rates, private car owners would have to pay different rates of premium depending on the size of the vehicles. Those who own cars up to 1,000 cc engine capacity will have to shell out a third party premium of Rs.784. In the case of cars with engine capacity of above 1,000 cc and up to 1,500 cc, the premium will be Rs.925. For cars exceeding 1,500 cc, it will be Rs.2,853.
The premium for two-wheelers below 75 cc is Rs.350; for above 75 cc and up to 150 cc vehicles Rs.357; for above 150 cc and up to 350 cc vehicles Rs.355; and for vehicles above 350 cc Rs.680. For goods-carrying private and public three-wheelers, the premium rates are fixed depending on their load-carrying capacities.
The IRDA premium notification covers a range of vehicles such as trailers, four-wheeler passenger carriages (depending on their engine capacity and seating capability), motorised two- and three-wheeler vehicles for carrying passenger for hire, special types of vehicles et al.
The insurance regulator has asked the insurers to “ensure that motor third party insurance is made available at their underwriting offices”. It has gone on to direct them to process any request for insurance ‘expeditiously'.
Any complaint about non-availability of insurance or use of methods to deny or delay the client seeking insurance cover will be taken seriously, it has warned.
The IRDA has also made it clear that insurers can't cancel the current insurance and issue fresh policies to effect new premium rates.
All vehicle owners have to compulsorily buy third party cover to compensate for any damage or liability caused to third party's life or property in the event of an accident. A comprehensive motor insurance comprises own damage as well as third party cover.
The revision in premium rates must be understood in the context of huge loss run by general insurance companies, estimated at over Rs.10,000 crore, on third party cover.
