Motor third party insurance premiums hiked by up to 40%

Motor third party liability insurance premiums will become costlier from April 1, with insurance regulator IRDAI hiking premium rates by as much as 40 per cent for 2016-17. While rates will go up by 40 per cent for all private cars with engine capacity under 1,500 cc, it will go up by 25 per cent for cars with a higher engine capacity. 

Every year, the IRDAI revises premium rates, taking into account the number of claims made and loss ratios for insurers. Motor third-party insurance is mandatory for all vehicles and covers liability arising from third-party claims due to accidents. The regulator has also cautioned insurers against denying or refusing to provide third-party covers for any vehicle.

IRDAI, in its circular, said the cost inflation index had increased by 5.57 per cent year-on-year, from 1,024 in FY15 to 1,081 in FY16.

For cars below 1,000cc (like Alto, Nano and Kwid) the premium has risen by 40% to Rs. 2,055, while for compact or B segment cars (1,000-1,500cc) the increase is 40% to Rs. 2,237. For sedans, the regulator has increased it by 25%.

Premium for two-wheeler insurance for bikes below 75cc and between 75-150cc has been increased on average by 9.6% and 15% to Rs. 569 and Rs. 619, respectively. For premium bike models between 150-350cc, the IRDAI has hiked rates by 25%. Surprisingly, for super bikes that are above 350cc, the regulator has slashed premium rates by 10%.

The only other vehicle category for which premium rates have been lowered is goods-carrying private vehicle carriers below 7,500kg - by 10% to Rs 7,849. For private autos, excluding e-carts, rates have gone up by only 3.2% to Rs 4,200. IRDAI has not increased premium rates for public goods-carrying vehicles below 7,500kg and those between 7,500-12,000kg and has maintained premiums at Rs. 14,390 and Rs. 15,365, respectively.