This could happen as insurance companies may hike premiums by as much as 40 per cent for commercial vehicles and 10 per cent for two-wheelers and personal cars to compensate for high claims in the motor insurance business.
The general insurance industry is currently in discussions with the regulator on the revision of premium rates for third party motor insurance which will be applicable from April.
Third party coverage
Motor insurance in India has two components — one covering third-party damage in terms of property or life and one covering one’s own damage.
The third-party coverage is mandatory by law for both commercial and personal vehicles.
The Insurance Regulatory and Development Authority had earlier come out with a formula based on inflation and claims experience of insurers to account for risk based pricing for revising premium rates.
‘transparent formula’
“It’s a very transparent formula by which the increase will be given but the problem is that the start itself is 40 per cent lower than what it should be. Though there has been an annual increase in premium rates it is still not adequate and it is trailing behind the claims. So the industry needs a correction of 40 per cent in third party motor premium,” said G. Srinivasan, CMD, New India Assurance.
The general insurance industry is currently in discussions with the regulator on the revision of premium rates for third party motor insurance which will be applicable from April.
Third party coverage
Motor insurance in India has two components — one covering third-party damage in terms of property or life and one covering one’s own damage.
The third-party coverage is mandatory by law for both commercial and personal vehicles.
The Insurance Regulatory and Development Authority had earlier come out with a formula based on inflation and claims experience of insurers to account for risk based pricing for revising premium rates.
‘transparent formula’
“It’s a very transparent formula by which the increase will be given but the problem is that the start itself is 40 per cent lower than what it should be. Though there has been an annual increase in premium rates it is still not adequate and it is trailing behind the claims. So the industry needs a correction of 40 per cent in third party motor premium,” said G. Srinivasan, CMD, New India Assurance.
For More Information please Visit : http://www.thehindubusinessline.com/industry-and-economy/banking/car-truck-insurance-premiums-set-to-go-up/article4361599.ece
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