With the start of the new financial year, a typical year would see a 5% to 10% hike in the annual premium for mandatory Third Party (TP) insurance policies. However, citing the ongoing Coronavirus outbreak in the country and across the world, Insurance Regulatory and Development Authority of India (IRDAI) has decided to keep any such increase on a hold until further notice.
The move was confirmed through an order by IRDAI on 27th March 2020, stating that the validity of ongoing (2019-20) premium rates for Motor Third Party Liability Insurance Cover has been extended beyond 31st March, 2020 until further notice. The aim is to prevent any additional burden on the motor insurance holders in the country at the time of crisis.
"Accordingly, all insurers shall continue to charge the rates currently being charged for Motor Third Party Liability Insurance Cover from 1st April, 2020 onwards until further orders," the order stated.
For those unaware, premium rates for Motor Third Party Liability Insurance Cover are revised on every April 1st. The ideal way to determine the hike is based on the number of claims made and loss ratios for insurers. For the upcoming year, a hike of 5% to 15% was earlier suggested by the IRDAI for both cars as well as two-wheelers.
That would include an increased premium rate of Rs 3,383 for cars with an engine capacity of 1000cc to 1500cc. This would have marked an increase of Rs 162 from the earlier premium rates. With the decision now put on a hold, the increase in the rates wonˇŻt be seen until further notice.
This means that the premium rates for other vehicle categories also remains the same. Cars with an engine capacity of more than 1500 cc will incur a premium rate of Rs 7,890. Similarly, those with an engine capacity of less than 1,000 cc will attract a rate of Rs 2,072.
In the two-wheeler segment, small mopeds, scooters and other two-wheelers with engine capacity below 75 cc will attract the present rates of Rs 482. Scooters and motorbikes with engine capacity between 75-150 cc will be charged Rs 752 while high-powered bikes will cost Rs 1,193 in insurance premium.
The standard premium rates are an effort to reduce the burden on vehicle buyers amidst the ongoing Coronavirus pandemic and the resulting economic slowdown. Once the markets reopen in the coming months and sales of new vehicles improve, along with that of new insurance policies, IRDAI is likely to introduce the 5% hike in the premium rates.