IRDA Hikes Third-Party Motor Insurance Premium

IRDA has hiked the premium for third-party motor insurance from April 1^st, 2014. It's a loss making business for the general insurers while TP motor insurance is mandatory for all the vehicles. 28^th March, 2014; Mumbai: Premium for third-party motor insurance has been hiked by IRDA (Insurance Regulatory and Development Authority) from 1^st 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.

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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.

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.