Insurers, truckers on collision course over third-party premiums
19 Apr 2011
Insurers and truckers in India are headed on a collision course, with the latter deciding to jack up third-party premiums for commercial vehicles by almost 80 per cent, thanks to soaring losses.
The powerful trucking industry lobby is opposed to any sharp hike in premiums and various bodies are planning to launch a nationwide agitation, including possibly a strike.
Importantly, the industry is also toying with the idea of floating its own general insurance company to cover the seven million-odd commercial vehicles, including trucks and buses, in India.
The Insurance Regulatory and Development Authority (IRDA), the industry regulator, is considering a move to raise third-party premiums on commercial vehicles.
''We may go on a nation-wide strike of all transporters,'' warned Gurinder Pal Singh, chairman, All India Motor Transport Congress, the apex body for transporters. ''Four years ago, the regulator had increased third-party premiums by 150 per cent, but was later forced to roll back to 60 per cent.''
Gill Raghabir Singh of Gill Roadways Association, says the body may consider setting up an insurance firm to provide coverage to its members.
Top office-bearers of transport associations – there are about 400 of them in India – are meeting on Wednesday to decide on the future course of action. About seven million trucks, light commercial vehicles and private buses operate in the country, carrying goods and passengers.
''Our costs are spiralling on a regular basis mainly due to rise in diesel and petrol prices,'' added Singh. ''An additional rise in premium will squeeze our already wafer-thin margins.''
The IRDA is expected to shortly announce a steep 80-per cent hike in third-party premiums for trucks and buses, and a 10-per cent hike for cars and two-wheelers. The move comes as the general insurance sector is reeling under losses thanks to hefty claims-related payouts.
According to insurance industry estimates, insurers are paying out Rs122 as claims on every Rs100 of third-party premium for insuring trucks and buses. In contrast, the average payout for cars and two-wheelers works out to just Rs55.
The IRDA had revised the premiums for motor insurance in 2007; initially, it had hiked the rates by 150 per cent, but after truckers went on a nation-wide strike, it halved the hike.
The World Health Organisation (WHO) in its global status report on road safety last year had said that with 135,000 deaths annually, India had the worst road traffic accident rate worldwide.
Trucks and two-wheelers were responsible for over 40 per cent deaths on Indian roads.
