With a view to meet the rising cost and cost of high claim settlement, market regulator Insurance Regulatory and Development Authority (IRDA) announced the price hike in third party insurance cover for two wheelers, passenger cars and commercial vehicles. Third-party insurance cover protects the vehicle owner from any financial liability, in case of damage to life or property in an accident to the third person. Further, IRDA has asked all the concerned to put forward their view by 1st March on the subject matter.
IRDA is an autonomous statutory body enacted under the act of Parliament. It has a duty to promote and regulate insurance and reinsurance business and to protect the interest of and secure fair treatment to the policy holders. Further Indian Insurance Companies are regulated by the terms and conditions of IRDA. It also monitors and implements quality competence and fair dealing of the insurance companies and ensures that the insurance companies are providing the precise and correct information about the products offered by them to the customers.
IRDA said that it has agreed to raise the premium rates by two fold from 1st April 2013, thereby making motor insurance premium more expensive. This move was made in order to meet the rising inflation as well as history of settlement claim.
The decision to hike the premium rates by IRDA was done well back in March 2012, which was however challenged by the transporter’s association. The Association had filed petition in Calcutta High Court against IRDA and the General Insurance Companies against the hike in premium prices. After eight months of legal battle, Calcutta High Court justified the hike in premium prices and ruled in favour of IRDA.
Earlier in 2012, while asking domestic general insurers to hike the provisioning — capital to be set aside to pay the future claims as it takes years to settle claims under this category — against the third party motor portfolio, IRDA had assured general insurers that it will allow them to hike the third party motor rates gradually. IRDA had dismantled the third party motor insurance pool from April 1 last year thereby linking premium rate with the prevailing market rate.
With regard to rise in premium amounts, for passenger cars not exceeding engine capacity of 1,000 cc, the revised third party premium is proposed to be hiked by 85.30% to Rs 1,453 per annum. For two-wheelers exceeding 350 cc, the premium would go up by 108.14% to Rs 1,415.
For goods carrying vehicles, excluding three-wheelers, with carriage capacity exceeding 40,000 kg, the premium would go up by 313.45 % to Rs 53,832 per annum. The IRDA also notified the enhanced premium rates for vehicles such as trailers, three -wheeler passenger carriages etc.
