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Exclusive: Third Party Motor Insurance premiums could see a 15-20% hike in 2022
In a proposal sent to the Insurance and Regulatory Development Authority of India (IRDAI), the companies have urged the insurance regulator to allow them to raise prices by 15-20 per cent
As the first wave of Covid-19 pandemic hit the country in March 2020, plans of many insurance companies to increase premiums of Motor third part insurance were shelved. The companies had almost completed preparations to increase the premium prices around this time. This was the last time, companies considered increasing the price of third part insurance premiums.
Zee Business’ Anurag Shah brings this exclusive report for the viewers citing his top sources.
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But that is likely to change now in 2022. In a proposal sent to the Insurance and Regulatory Development Authority of India (IRDAI), the companies have urged the insurance regulator to allow them to raise prices by 15-20 per cent
At least 25 General Insurance Companies operating in India are pinning their hopes on this and are expecting a green signal from the regulator to raise this year as we enter in the third year of the pandemic. The companies are of the view that the current prices are not sustainable for them. Some companies are now facing situation where their solvency has come down below the prescribed limit.
There has been a significant rise in the third part insurance claims which has created an added pressure on the service providers.
After the 2018 Supreme Court decision which made it mandatory for two-wheeler owners to have 5 year while four wheelers to have 3-years third party insurance. For two-wheelers registered in 2022, an insurance cover till 2027 is given.
As per 2019 rates of motor third part insurance:
As per the Motor Vehicle Act, all motor vehicles plying on the road must have a third part insurance cover and the premium of which is decided by IRDAI. The insurance premium is reviewed annually. But, in the wake of Covid-19, there has been no increase in the premium prices over the past two years.
As per IRDAI’s Annual Report of 2021, third party insurance accounts for 25 per cent of the business for non-life insurance companies. This report said that companies collected Rs 40,000 cr in third part insurance premiums during this period.
While, the hike in premium prices of third part insurance will bring a much needed relief for the companies, it will be a burden on the pockets of a common man. New vehicle buyers will also have to pay ore price on the premiums.
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