Renewal premium rates to also rise for private cars & two-wheelers; new rates lower than the proposed hike in draft circular
The insurance regulator has allowed companies to raise third-party motor insurance premiums for private cars and two-wheelers by 16-30% in the fiscal year that began April 1. The revised rates are significantly lower than the 100% hike proposed in a draft circular issued last month. Insurance premium caps for commercial vehicles have been raised 8-20% and reduced in some categories.
Third-party motor tariffs are fixed by the Insurance Regulatory and Development Authority of India (IRDA) and are mandated by law as this protects the owner of the vehicle against compensation sought by accident victims. The increase in rates means that buyers may need to pay ` . 822 more for big cars and ` . 266 more for mid-size ones. Renewal rates will also rise.There is no cap on the compensation that a victim can claim in case of an accident, but there is a limit on third party premiums. Insurers want this cap removed so that they can charge according to the risk undertaken.
IRDA took consumer feedback to its draft circular into account before issuing the new rates. General insurers had said that premium rates were inadequate. Last year, the regulator raised third-party motor premiums by 20% for private cars and 10% for two wheelers.
A comprehensive motor insurance policy is essentially made up of two parts -own damage component and third-party cover. The latter comes into the picture when an individual who has sustained injuries or whose property has suffered damage in accidents caused by the policyholder’s vehicle has to be compensated. The reimbursement payable in case of injury or death is determined by the Motor Claims Accident Tribunal.
Source : The Economic times
Date: 2nd April 2015