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Insurance Article

Motor owners in metro cities to pay higher policy premium

January 04 2016
Motor owners in metro cities to pay higher policy premium

The recent Chennai floods resulted in over ₹ 1500 crore worth of claims for damaged cars. This is double the amount that insurers faced after the 2006 Mumbai floods. The extensive damage and huge claim amount have led major insurance companies in India to believe that insuring cars in metro cities stand at a much higher risk than was anticipated earlier.

To adequately cover this heightened risk, car owners in Mumbai, New Delhi, Chennai and Kolkata may now have to pay almost 15% higher premiums to insure their vehicles, as compared to their counterparts in other states. Motor insurance policy prices are determined by various factors including geography and vehicle fuel type.

After the Chennai floods, most motor insurance companies have paid out ₹ 30-50 crore worth motor claims. During the floods, special helplines were set up by insurers to facilitate easy towing of damaged cars to the nearest workshop.

The Insurance Regulatory Development Authority of India (IRDAI) has intervened to ensure quick payout of these claims. It has also asked insurers to publicize the details of their offices through media and state government for hassle-free claim filing.

Since the 2007 tariff deregulation, there has been fierce competition among insurers, with each undercutting the other in most products and services. Experts opine that insurance companies need to strengthen their actuarial capabilities to underwrite risk and value it appropriately.

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