Motor third-party premium rates to be revised after two years

The ministry of road transport and highways released a draft notification for revising the motor third party premium rates for the financial year 2023

The ministry of road transport and highways in consultation with the insurance regulator on Friday released a draft notification for revising the motor third party premium rates for the financial year 2023. 

The proposed revision in motor third party premiums will take place after two years as the premium rates were not revised for FY21 and FY22 because of the pandemic.

According to the revised rates, private cars with 1,000 cubic capacity (cc) will attract rates of Rs 2,094. Similarly, private cars with 1,000 cc to 1,500 cc will attract rates of Rs 3,416 while above 1,500 cc private cars will see a premium of Rs 7,897. Two-wheelers over 150 cc but not exceeding 350 cc will attract a premium of Rs 1,366 and for two-wheelers over 350 cc the revised premium is Rs 2,804. 

For public goods carrying commercial vehicles, the premium will range from Rs 16,049 to Rs 44,242 depending on the gross vehicle weight while for the private ones the premium will range from Rs 8,510 to Rs 25,038.

Further, the draft notification has proposed a 15 per cent discount for electric private cars, electric two wheelers, electric goods carrying commercial vehicles and electric passenger carrying vehicles. The proposed discount is expected to incentivise usage of environmentally friendly vehicles. Electric private cars will attract a premium of Rs 1,780 to Rs 6,712 depending on their capacity expressed in kilowatts. Similarly, two-wheeler electric vehicles will attract premiums in the range of Rs 457 to Rs 2,383. Further, hybrid electric vehicles will attract a discount of 7.5 per cent on the motor third party premiums.

The three-year single premium for new private cars and five-year single premium for new two-wheelers has also been revised and will attract premiums in the range of Rs 6,521 to Rs 24,596 and Rs 2,901 to Rs 15,117, respectively, depending on their cubic capacity.           

The insurance executives are not very enthused with the proposed revision and termed it as a pro-policyholder move. The claims burden in the motor segment had gone down because of the pandemic but the increased claims on the health segment more than offset the dip in claims in the motor segment, an insurance executive said. 

The insurance industry was expecting a decent increase from the regulator’s side after two years of no revision in premiums because there have been some court judgments, which have increased the claims severity on insurance companies.