Third-party motor insurance premium may go up 30%

Third-party motor insurance premium rates are likely to go up by 30 per cent from 1 April if a proposal of the Insurance Regulatory and Development Authority of India (IRDAI) is approved.

Third-party insurance cover is mandatory for all vehicles, although the rates vary depending on the type and size of the vehicle as also the category of vehicles – private or commercial – and their capacities.

Accordingly, for four-wheeled vehicles not exceeding 1,000 cc the basic premium is proposed to be hiked to Rs6,396 from the current Rs4,920 while for those above 1,000 cc, the new rate could be Rs8,408 against Rs6,726 at present.

The new figures are based on data supplied by the Insurance Information Bureau (IIBI) for the period 2007-08 to 2014-15 and includes the number of policies, number of claims reported and amount of claims paid up to 31 March 2015 for each vehicle category.

The final decision on premium rates is expected by the month-end as the authority wants feedback from all stakeholders to an exposure draft released last week.

IRDA had, in its order on 15 April 2011, notified that it would review and adjust the premium rates for motor third party insurance covers annually.

The exposure draft on the revision in premium rates for motor third party Insurance cover is for the financial year 2016-17.