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Insurance Article

Third Party Motor Insurance is Now the Money Spinner

November 07 2017
Insurance

According to the data collected by the Insurance Regulatory and Development Authority of India (IRDAI), general insurance companies, in the last financial year, collected ₹26,523 crore as premium for third party motor insurance, while the own damage segment saw a premium of only around ₹23,727. This has made third party motor insurance, which was earlier considered a drag on insurance firms, their new money spinner.

Sanjay Datta, head of Underwriting & Claims at ICICI Lombard General Insurance said, “There are various factors that have played in the increase of the third party pool, including reduction in own damage claims and increase in premium for third party segment.”

The third party pool had actually been dismantled in 2011, as the cover had then moved to an almost insignificant risk pool. During that time, mostly public sector insurance companies were issuing these policies.

However, today the tables have turned and there are quite a few private sector general insurance companies providing third party insurance as well. In fact, they now write out more third party insurance policies than they do own damage covers.

The number of policies issued has increased to the level that the IRDAI has had to raise the premium of third party motor insurance to meet the loss ratio of the industry. In fact, this financial year, the IRDAI raised the cost of third party motor insurance premium by 28% for cars in the 1000- 1500 cc and above range.

Moreover, since third party motor insurance is mandatory for all private, public and commercial vehicles according to the Motor Vehicles Act, the increase in the number of cars on the road has further led to an increase in premium for this type of motor insurance.

Source: Economic Times

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