The Insurance Regulatory and Development Authority of India (IRDAI) has reportedly put forth a draft proposal intending to hike premium price effectively from 1st April this year. If introduced, this would mean that motorists in India would have to shell out an additional 30 percent on third party insurance premiums.
Speaking on the occasion to TOI, Puneet Sahni, Head of product development, SBI General Insurance Co. said, “We need to do a balancing act. The motor insurance portfolio for insurers has been bleeding for many years now. But we can't place the burden of their losses on policyholders. So we can only gradually increase rates to curb losses. A 30 percent hike again falls short of what insurance actuaries would want - given the loss ratios are between 80-150 percent for general insurers in the country. To curb losses, what we need is not higher premiums but regularization. We are pushing for the implementation of the Road Transport & Safety Bill and Motor Insurance Act 1988, so that there is a cap on liability, geography and the time period within which a claim can be filed.”
The draft stipulates that four wheelers featuring engine capacities under 1,000cc shall be liable attract up to 30 percent hike on premium. Vehicles that come with over 1,000cc engine shall get witness a 25 percent hike on premium. The IRDI has proposed to hike about 25-30 percent in insurance premiums for the commercial vehicles. Mr. Sahni, pointed out that the commercial vehicles have made the highest claims till date.
The two-wheeler segment has not been spared from the hike in insurance premium. Motorbikes featuring engines bigger than 350cc shall witness a premium hike of about 10 percent while the motorbikes with engines below 350cc would be liable to pay about 10-15 percent hike in premium. Apart from two-wheelers, share autos that come with seating capacity of about 6-17 seats shall witness a heavy 115 percent hike bring the amount to Rs 2,059 as against the current premium of Rs 959. Additionally, the three-wheeler insurance premium shall also be hiked by up to Rs 400, while the e-rickshaw premium is expected to be hiked by about Rs 59. Six-wheelers in the country would pay insurance premium of about Rs 2,229 owing to 51 percent hike that could be effective soon.
