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ICICI Lombard Expert Blog

Uninsured Two-Wheelers To Incur Premium Dues Of ₹52k Crore By 2025

January 18 2018
Uninsured Two-Wheeler

The estimated premium dues by uninsured two-wheelers, which stood at ₹5,641 crores in 2015-16 would go up to ₹52,000 crores by 2024-25, according to Insurance Regulatory and Development Authority of India (IRDAI). Currently, about 75% of the two wheelers are uninsured in the country and considering this rate to continue along with an additional inflation, it could further move upwards.

"Post adjustment for inflation of 5%, this comes to around 80% of the entire motor insurance portfolio of 2015-16. The overall loss in premium is much more if we account premium for own damage cover also," according to IRDAI's quarterly journal.

According to a report by General Insurance Council of India, above 60% of the vehicles plying on Indian roads are uninsured and most of them are two-wheelers. The reports also suggested that 75% of the total two-wheelers running in India remains uninsured.

Interestingly, the insurance claim ratio for third-party insurance is the lowest for two-wheelers among all classes of vehicles. The main reason behind the poor insurance coverage is believed to be comparatively small premium for comprehensive and third party two-wheeler insurance policy.

Thus, it can require greater effort to earn the same volume of premium when compared to other class of vehicles with higher insurance premiums. Also, not much effort is made by the distributors to ensure the renewal of the two-wheelers after its sale.

IRDAI chairman, T.S Vijayan wrote in its journal, “Distribution channel plays an important role in renewal of business. After one or two years, most owners are not in touch with these showrooms as they go to local garages for servicing etc. For renewals after one year not much effort is made by these distributors as they are happy with the captive and higher ticket size insurance.”

*Source: Times of India

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