Insurance industry favours 40-50% hike in 3rd-party motor premium

On March 9, regulator had proposed an increase in the third-party premium, ranging between 14% and 108% from April 1

Amidst threat of a nationwide strike by truckers, the general insurance industry has favoured a moderate hike in the third party motor premium to the tune of 40-50 per cent against a steeper increase proposed by regulator IRDA.

The regulator had on March 9 proposed a steep increase in the third-party premium, ranging between 14% and 108% from April 1. This is on top of the 9-20% hike already effected across vehicle categories for this fiscal.

"The industry is of the opinion that the third party premium rates are not adequate, considering our claims experience. Hence, in our view, the premium hike must be in the range of 40-50 percent as it will help us break-even under the segment," New India Assurance Chairman and Managing Director G Srinivasan told PTI.

He also heads the General Insurers (Public Sector) Association.

Srinivasan said the industry has already made its representation before the IRDA on the issue through General Insurance Council.

Meanwhile, the national transporters lobby the All-India Motor Transport Congress (AIMTC) has strongly opposed the proposed hike and warned of a nationwide strike.

"During its emergency meeting held on March 26, we had decided that if IRDA does not listen to us, then we have no option but to go on a nationwide strike," AIMTC President Bhim Wadhwa said in a statement.

The lobby claims to represent around 93 lakh truckers and nearly 50 lakh bus and tourist operators.

AIMTC is opposing the hike saying the number of insurance policies has increased by 13.30 per cent along with the premia that have increased by 76.64 per cent and third party claims have drastically gone down.

Also, the claim settled as well as claim outstanding shows substantial decrease. Hence, there is no reason to hike the third party premium, it said.

They also said that the road transport sector is already reeling under most adverse economic conditions where on one side all input costs be it toll, costly tyres, spare parts, insurance, tax component (legal) and other en route expenses are spirally increasing but the freight is not increasing proportionately.

"We submit that if the current third party premium hike is pushed through it would not be possible for us to contain the strong resentment brewing among the transport fraternity across the country," Wadhwa said, adding the IRDA Chairman has not responded to our request for a meeting with him so far.