3rd party motor insurance premium set to go up

IRDAI releases exposure draft on rates for 2017-18

Third party motor insurance premium for several categories of vehicles will increase, by as much as 50 % for many, from April if a revision in the rates mooted by Insurance Regulatory and Development Authority of India gets approved.

An exposure draft on revision in the rates for 2017-18 released by the IRDAI sought to spare private cars not exceeding 1000 cc by suggesting a status quo. This category now attracts a premium of ₹2,055. In the previous revision, the regulator had increased the premium by nearly 40 %. For other categories of private cars, the draft proposed an increase of up to 50 %.

Private cars

Owners of private cars in the 1000-1500 cc would be required to pay ₹3,355 towards the third party cover as against ₹2,237 at present. For cars above 1,500 cc the rate proposed is ₹9,246 (₹6,164). Many SUVs (sport utility vehicles) that had gained considerable popularity among customers in the last are part of these two categories.

For two-wheelers, the regulator mooted no change for less than 75 cc engines. But it has worked out an over 16 % increase in the premium for those in 75-150 cc category, with the rate set to go up to ₹720 from ₹619. Many of the popular daily commute bikes are in this category.

The increase recommended is over 41 % for two-wheelers in the 150-350 cc class or from the existing ₹693 to ₹978.

High-end vehicles

Owners of high-end two-wheelers (above 350 cc) will need to shell out 50 per cent more towards the premium if the draft proposal is accepted. They need to pay ₹1,194 as against the existing ₹796.

Similarly, the exposure draft has proposed a hike in the premium for several other categories of vehicles, including goods carrying public and private carriers (other than three wheelers), tractors besides three and two-wheelers that carry passengers.

According to IRDAI, the rates proposed had been arrived on an analysis of the data provided by the Insurance Information Bureau of India.

The data pertains to the “experience period consisting of accidents years from 2011-12 to 2015-16 in respect of gross written premiums and amount of claims paid up to March 31, 2016.”

Stakeholders have been asked to comment on the exposure draft on or before March 18.