The Ministry of Road Transport and Highways may have a say in fixing third party insurance premium rates, if their proposal gets approved. Since this would result in less bigger hikes in premium, it will benefit the customers. However, general insurers may increase the prices of comprehensive covers to compensate the losses.
A motor insurance consists of third party and own damage insurance. While third party insurance covers for damages caused to the third party, the own damage covers damage to own vehicle. As per a recent inclusion in the Motor Vehicles Act, the Ministry of Road Transport and Highways will be considered before setting premium rates. However the bill is still pending for approval.
Third party car insurance is already mandatory as per the Motor Vehicles Act. The third party insurance premium is regulated by the Insurance Regulatory and Development Authority of India (IRDAI), which depends on the vehicle type and number of claims made in that category in the previous year.
If Road Ministry gets to decide the premium amount, it is expected that it will set lower premiums. This will benefit the customers but will affect the insurers, which already demand for 40-60% hike in the third party segment. Consequently, general insurers are expected to increase the premium of the comprehensive motor insurance.
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