Third-party motor insurance premiums to go up from tomorrow

Owning a vehicle would now pinch pockets more, with third-party motor insurance premiums set to rise for two-wheelers, private cars and heavy load carriers from tomorrow.
"It is observed that the cost inflation index (CII) has increased by 9.05 per cent over the previous year, i.E. From 939 in FY 2013-14 to 1024 in FY 2014-15.
"..The Authority hereby notifies the premium rates applicable to Motor Third Party Liability Insurance covers with effect from April 1, 2015," said Insurance Regulatory and Development Authority of India (IRDAI) in a notification.
The premiums are being revised after a gap of three years.

Owners having third-party cover for private cars of 1,000-cc capacity would now have to pay premiums of Rs 1,468 from Rs 784, those exceeding 1,000 cc but below 1,500 cc will attract premium of Rs 1,598 (from Rs 925) and those above 1,500 cc at Rs 4,931 (from Rs 2,853).
"Motor Third Party Liability premiums are increasing but at the same time insurance companies are still losing money on the portfolio.

"In a free market scenario...Each insurer should be free to price the product as per their risk perception. That will ensure that insurers who are committed to providing good service in this portfolio have an opportunity and incentive to differentiate their services which no one may be willing to do in a fixed price, loss-making scenario," said Pavan Dhingra, Director Prudent Insurance Brokers.

The third-party cover for two-wheelers of up to 150 cc to 350 cc capacity would attract premium of Rs 554 from the current Rs 350 and those exceeding 350 cc would cost of Rs 884 as against Rs 680.
The general insurance industry had favoured a 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 per cent from April 1. This is on top of the 9-20 per cent hike already effected across vehicle categories for this fiscal.

It is mandatory to for a vehicle owner to obtain third-party insurance to provide insurance cover to others in case of injury or loss of life.