De-tariff Of Third Party Insurance Premium Rates

By the year end, the third party motor insurance premium rates will be depended on the market. Insurance Regulatory and Development (IRDA) would de-tariff the premium rates for guiding vehicle owners according to Mr. M Ramprasad, member of IRDA. In case of vehicle falling under the unprofitable category, the premium rates are likely to get increased and discounts are sure to appear on the premiums with low claims. The expected rate hike of about 25% to 137% is likely to show up from April this year. The third party liability premium rates have seen increment from past 2 years.

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In terms of motor insurance it is necessary to have third party cover as it protects against any damage caused to property or life. Here the liability of the insurer is unlimited and hence it turns out to be an unprofitable affair.

Insurance companies had been providing cover to commercial vehicles from a common declined pool of Rs. 400 crore which has completed two year and will help IRDA to understand the loss area and the kind of vehicles which are a part of this pool. As per the IRDA’s third party motor insurance tariffs, high risk vehicles will also be provided the cover.

As per various officials like- Madhukar Sinha from TATA AIG and Sanjat Datta from ICICI Lombard, the de-tariffed rates would change the concept of ‘one-size-fits-all’ premium as every insurer can decide on the rates by themselves depending on the underwritings.

G Srinivasan, Chairman and Managing Director of New India Assurance believes that de-tariff is the need of the industry but requires to get executed properly in order to avoid issues related to supply side.

Written By: PolicyBazaar - Updated: 26 June 2021
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