A Hero Honda Motors Ltd. employee lines up motorcycles at a showroom in Mumbai, India. (Photographer: Prashanth Vishwanathan/Bloomberg News)

IRDAI Proposes Increasing Third-Party Insurance Premium For Cars, Two-Wheelers

Third-party insurance premium for cars, two-wheelers and transport vehicles may go up with the Insurance Regulatory and Development Authority proposing substantial increase in premium rates for the current financial year.

IRDAI has proposed to increase the Motor Third Party premium rates for cars below 1000 cc to Rs 2,120 from the existing Rs 1,850 for the fiscal 2019-20.

Similarly, for cars falling between 1,000 cc and 1,500 cc also, premium is being proposed to be increased to Rs 3,300 from the existing Rs 2,863. However, for luxury cars (with engine capacity of over 1,500 cc) no change in premium has been proposed from the existing Rs 7,890.

Normally, the rates are revised from April 1. However, this time, the IRDAI had decided to continue with the old rates until further order.

Now, the regulator has come out with a draft of new rates for premium for the current financial year. It has sought comments from stakeholders on the proposed rates till May 29.

According to the draft, premium for two-wheelers below 75 cc is proposed at Rs 482, up from Rs 427. Hike has also been proposed for those between 75 cc and 350 cc. However, no rate hike has been proposed for those exceeding 350 cc.

Also, no change has been proposed in the single premium rate -- 3-year for new cars and 5-year for new two wheelers.

IRDAI has also proposed a discount of 15 percent, on motor premium rates for electric private cars and electric two-wheelers.

It also does not propose to raise premium rates for e-rickshaw. However, the rate could go up in case of school buses.

Rate increase has also been proposed for taxis, buses and trucks. The premium on tractors may also up.

IRDAI said the data provided by the Insurance Information Bureau of India has been used for arriving at the premium rates and the claims paid data in respect of each of the accident years starting from the year 2011-12 up to 2017-18 has been considered.

Also, gross written premiums for the 2011-12 to 2017-18 have been considered, it added.

Also read: IRDAI Suggests Staggered Payment Of Accident, Health Claims