Meeting motor TP obligation tough due to IRDAI formula: Shriram General MD

Shriram General Insurance sees industry-wide difficulty in achieving IRDAI's motor third-party coverage targets and plans premium growth via non-motor insurance push

The general insurance industry is finding it difficult to meet the obligations for motor third party (TP) mandated by the Insurance Regulatory and Development Authority of India (IRDAI) and is making representations to the regulator regarding the same, said Anil Aggarwal, managing director and chief executive officer, Shriram General Insurance.

 

“Achieving the obligation in motor TP is a big challenge for the industry due to the formula used to calculate it, while everyone is able to meet the rural and social sector norms. We have also given our representation to the regulator as nobody is able to achieve their target,” Aggarwal said in an interaction with Business Standard.

 

Meanwhile, the regulator recently issued a master circular raising the minimum specific cover under rural, social and motor third party obligations for FY27.

 

Insurers with 2–5 per cent market share in the motor TP segment have been mandated to increase their minimum coverage in the segment by 10 per cent in FY26, and by 11 per cent in FY27. 

 

Additionally, insurers with 5–10 per cent market share in the segment have been asked to increase their coverage by 7.5 per cent in FY26, and by 8.25 per cent in FY27. Companies with over 10 per cent market share in the motor TP segment have been mandated to increase their coverage by 5 per cent in FY26 and by 5.5 per cent in FY27.

 

Shriram General, predominantly a motor insurance–focused general insurer, recorded 31 per cent year-on-year growth in gross written premium (GWP) to ₹ 960 crore. Of this, ₹ 867 crore accrued from motor insurance, with 89 per cent of the premium from old vehicles and 11 per cent from new vehicles.

 

The company targets GWP of ₹ 4,600–4,700 crore by the end of FY26 by increasing focus on the non-motor insurance space and aims to touch ₹ 10,000 crore by FY30, with the non-motor segment contributing 20 per cent, with a key focus on health insurance. The recently launched health insurance is expected to account for nearly 15 per cent by FY30.

 

“Our base in non-motor is very small, and slowly we are diversifying. Currently, we are expecting around 10 per cent of the premium will be from non-motor and 90 per cent from the motor segment. Over a period of four to five years, we expect this to come down to 80 per cent, with non-motor premium going up to 20 per cent,” Aggarwal said.