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Insurance Article

Insurance Regulator Will Not Be Fixing 3rd Party Insurance Premium from 2021

December 04 2018

Insurance companies can quote their own premiums for third-party motor vehicle insuranceI

The Insurance Regulatory and Development Authority of India (IRDAI) has decided to stop the annual practice of fixing the premiums of third-party insurance for motor vehicles from the financial year 2020-21. As a result of this decision, it will be up to the insurance companies to quote their own premium, which might be reduced significantly owing to stiff competition among private insurers.

Presently, the insurance regulator announces the fixed premium every year for third-party motor vehicle insurance, which is mandatory for every vehicle plying on Indian roads. IRDAI reviews the number of claims made by the victims and the amount paid by the insurers every year to decide the premium amount for the forthcoming year.

But the transporters have been demanding for long that IRDAI should fix a cap on third-party insurance premiums and allow the insurers to offer discounts on it. Currently, since there is no fixed premium for own damage, the motor insurance companies offer huge discounts on premiums for comprehensive insurance policies which include both, own damage and the third-party liability coverage.

The decision comes in the wake of transporters’ dissatisfaction against the steep rise of third-party insurance premiums. Truckers have been protesting the 28% hike in premium, questioning the need for IRDAI to be part of the exercise. The Finance Minister even assured a roll-back of the premium hike to 15% but IRDAI refused the idea since more than half of the year had already passed by then.

The issue again came up for discussion during a meeting held in the Prime Minister’s Office (PMO), where the officials talked about de-tariffing third party premiums for motor vehicle insurance . It was also decided to notify the developments early rather than waiting till the end of March, next year.

*Source:The Times of India

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