Irda increases premium rates for third-party motor insurance

The Insurance Regulatory and Development Authority (Irda) today raised the premium rates for third-party motor insurance policies by 10-65 per cent across different categories of vehicles and ownerships.

While third-party premiums for personal cars and two-wheelers were raised by 10 per cent, new premiums for commercial vehicles would be higher by 65 per cent. The new rates are effective from April 1.

Third-party motor premiums for commercial vehicles rose for the first time in four years. Third-party motor premiums in India are regulated by Tariff Advisory Committee, a constitutional body under Irda.

Irda also specified third-party motor premiums would be revised annually, based on inflation and claim experience. Third-party premium rates for commercial vehicles were stagnant for the last four years, owing to opposition from transport unions. This resulted in an accumulated loss of Rs 3,500-5,000 crore for general insurance companies and adversely impacted their solvency margins.

“This is a welcome move by the regulator and the most significant development is that premiums would be revised annually,” said KG Krishnamoorthy Rao, managing director and chief executive officer, Future Generali India Insurance.