Motor insurance to cost more

About 10% Rise In Premium For Car & Bike Covers; 80% For Trucks
Mumbai: Motor insurance will soon cost more. The insurance regulator has published its proposed new tariff for motor third party insurance – the cover which compensates accident victims and has to be mandatorily purchased by all vehicle owners. Following the increase car and bike owners will pay approximately 10% more on new covers while truck owners will have to pay around 80% more.

IRDA has, however, not notified the date when the tariff comes into force. The Insurance Regulatory and Development Authority (IRDA) has said that it will receive comments from all stakeholders up to January 17 after which it will announce the date on which the new prices will become effective. The IRDA has also recommended to the government that the concept of limited liability, which existed before ’88 should be reintroduced and also that Motor Vehicle Act be amended to introduce a limitation period for filing compensation claims.

The regulator has revised prices considering that motor thirdparty insurance faced a deficit that could touch Rs 2000 crore. While premium for private vehicles will also rise, it will not be as dramatic as that for trucks. For a sub-1000cc vehicle the increase will be from Rs 670 to Rs 740 while for cars up to 1500cc the premium will rise from Rs 800 to Rs 880. In the case of trucks weighing up to 7500 kgs the premium will go up from Rs 5,580 to Rs 10,040. “For a truck the proposed increase is less than Rs 500 per month. For a transporter the insurance cost is a fraction of total expenditure and the increase is less than the rise in other operating expenses such as fuel” said K G Krishnamoorthy Rao, CEO, Future Generali India Insurance. He added that the deficit in motor-third party insurance is being met by all other policyholders who end up having to pay more. Third-party insurance is the only business where rates are fixed by the regulator. This is also the only policy where insurance companies receive a fixed premium but their liability is unlimited as claims are paid on the basis of compensation awarded by the motor accident claims tribunal.