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ICICI Lombard Expert Blog
 

Disparity in Third Party Premium Rates for Goods Carriers; HC Issues Notice

April 15 2018
Third Party Premium Rates for Goods Carriers

A petition from the Tamil Nadu Lorry Owners Association alleges a disparity in the third party motor insurance premium rates for goods carriers. Following this, the Madras High Court issued a notice to the Ministry of Highways and Road Transport and the Insurance Regulatory and Development Authority of India (IRDAI).

The petition claimed that the third party insurance premium rates for goods carriages was increased by 1,117 per cent in the past 15 years, while the rates for private vehicle policies was reduced substantially. Moreover, since third party motor insurance is mandatory under the Motor Vehicles Act, it is not possible to avoid availing the plan either.

Most often goods carriers are covered by a comprehensive motor insurance policy, that covers both the vehicle and the third party. However, since general insurance firms don’t provide cover for vehicles more than 10 years old, those are only covered by third party insurance.

The Ministry of Highways and Road Transport has taken the plea into consideration and assured the Association, that the premium rates would not be further increased without consulting them.

The IRDAI had promised, in an earlier meeting, that the premium rates would be decided based on the number of accidents caused by a particular category of vehicles, among other things. It was also promised that proper study would be conducted before the decision was made.

However, despite all these assurances, the IRDAI issued a draft proposal to increase the premium rates for goods carriers. This led to the petition being signed, and the plea being made again to the high court.

*Source: Business Standard

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