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Monday, April 18, 2011

Third party premium rises by up to 70%

The Insurance Regulatory and Development Authority (Irda) has increased the third-party motor premium by up to 70% from April 25. 

The regulator had issued an exposure draft in January, suggesting an 80% increase on all third-party motor policy. Irda said that based on the concerns expressed by various stakeholders during discussions, premium for goods carrying and passenger carrying vehicles has been brought down by 15% and so the real change is 68%. 

In the draft circular, the regulator had suggested an increase of 85% for goods and passenger carrying vehicles. Similarly, private car and two wheeler premium is increased by 10%. The regulator said that the rates are revised at an interval of 4-5 year and such long intervals cast an avoidable strain on policyholders as well as on insurance companies. 

The new rates will be based on parameters, like average claims cost for each class of vehicle, frequency of claims for each class of vehicle and cost inflation index for the year of review. Insurers have made an excess provision of Rs 3,500 crore towards thirdparty motor pool. Insurers, however, are not allowed to cancel the current insurance policies and issue fresh policies to effect new premium rates. 

The regulator has asked companies to be mindful of the concerns expressed by vehicle owners about both the rates and availability of insurance. Moreover, the regulator said that it will treat any complaint of non-availability of insurance or use of methods to deny or delay the client seeking insurance cover, seriously.


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