India hikes motor insurance premiums

Two new regulations to bring up cost of owning a vehicle

India hikes motor insurance premiums

Insurance News

By Gabriel Olano

The Insurance Regulatory and Development Authority of India (IRDAI) has introduced two new rules which will cause insurance premiums for motorbikes and four-wheeled vehicles to go up.

The regulator has ordered insurers to cease offering annual third-party motor insurance policies in favour of three-year plans for cars and five-year plans for motorcycles. Furthermore, the premiums for the entire term of the policy should be collected upon purchase. However, this is only for third party premiums, as own-damage premiums can still be collected annually or in lump sum.

IRDAI also hiked compulsory personal accident coverage (PAC) for owner-drivers under motor insurance policies from INR200,000 (US$2,693) to INR1.5 million (US$20,200). Previously, PAC premiums were at INR100 (US$1.35) for cars and INR50 for two-wheelers, but after the increase in coverage, premiums were set at INR750 (US$10).

“The cost will definitely be impacted as customers will now have to buy the (third-party) policy for a longer term,” Tarun Mathur, chief business officer for general insurance at Policybazaar, told the Economic Times. “Along with this they will also have to get a mandatory PA (personal accident) cover for the owner-driver worth INR750 (US$10). This will give a push to the overall cost of premiums.”

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