India’s third party motor insurance may cost 50% more

India’s third party motor insurance may cost 50% more | Insurance Business

India’s third party motor insurance may cost 50% more
The Insurance Regulatory and Development Authority of India (IRDAI) has proposed a nearly 50% premium hike for third party motor insurance in most vehicle categories for 2017-18. This comes after the government abolished the cap on third party liability of insurers in case of serious injuries or deaths in road crashes.
 
Vehicles in India are required to have third party insurance while insurance for own damage is optional. In comprehensive insurance policies, which include both components, the share of third party insurance is only set at around 30%. Rates are recalculated each financial year using accident data from previous years provided by the Insurance Information Bureau of India.

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The IRDAI has proposed premium hikes of up to 50% for vehicles that have 1,000 to 1,500cc engines, as well as bigger cars and SUVs. However, sources estimate that the final hike could be reduced to 25-30%. Larger motorbikes will also be affected by the premium hike, but vintage cars will get a discount of around 25%.
 
According to insiders, insurers are pushing for another round of increases once the amendments to the Motor Vehicle Bill are passed, with the stipulation that insurers shoulder the entire compensation awarded by motor vehicle claims tribunals.
 
If approved, the premium hikes will come into effect on April 1, the start of the 2017-18 fiscal year.

 
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