IRDA has hiked the premium for third-party motor insurance from April 1st, 2014. It's a loss making business for the general insurers while TP motor insurance is mandatory for all the vehicles.
28th March, 2014; Mumbai: Premium for third-party motor insurance has been hiked by IRDA (Insurance Regulatory and Development Authority) from 1st April, 2014. However, the quantum of increase from what it originally proposed in the recommendations of draft that is released in February, 2014 has been reduced.
The third-party premium (TP) has hiked from Rs 941 to Rs 1,129 for passenger cars below 1,000 cc. The draft proposal of the same was for a premium of Rs 2,227. The TP premium for passenger cars between 1,000-1,500 cc has been hiked to Rs 1,332 from Rs 1,110. Its draft proposal was of Rs 1,677. Passenger cars above 1,500 cc have a hike to Rs 4,109 from Rs 3,424 in their premium. The proposal for this category was Rs 4,295.
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The TP premium for two-wheelers of 350 cc and above has been hiked to Rs 884 from Rs 804 by IRDA. The proposal was of a reduction to Rs 306 in the draft. The premium for bikes between 150-350 cc has been hikes to Rs 462 from Rs 420 and for 75-150 cc, it has raised to Rs 464 from Rs 422.
While having TP motor insurance is compulsory for all the vehicles that are plying on Indian roads, it's a loss-making business for the general insurers. Motor TP pricing covers liability that is arising from third-party claims because of accidents.
Irda had been asked by general insurers for the consideration of an increase of 50-60% in TP premium in view of the high provisioning which is currently at 210 % for the declined risk pool.
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